Bounce back loan newish business

Jeremy535897

Non-trading business are not eligible (holiday lets), so only the trading dog-walking business qualifies.

This is wrong (see my earlier post), although I admit I was surprised when I checked. See
https://www.accountingweb.co.uk/any-answers/can-landlords-use-the-bounce-back-loan-scheme

Be very careful with glamping pods, as I am aware they can have a propensity to leak (and that means rot).

dutch2012

Jeremy535897 said:

Non-trading business are not eligible (holiday lets), so only the trading dog-walking business qualifies.

This is wrong (see my earlier post), although I admit I was surprised when I checked. See
https://www.accountingweb.co.uk/any-answers/can-landlords-use-the-bounce-back-loan-scheme

Be very careful with glamping pods, as I am aware they can have a propensity to leak (and that means rot).

That’s great Jeremy. Thank you. How can joe public work it out when Even when the professionals are disagreeing! But it seems positive for my circumstances. And as for the Glamping pods.... yes I have read of some horror stories. Including a guest arriving and a bucket in the middle of the pod and being told it was all part of the experience. The ones I’m hoping to site are hopefully of better quality.

Grumpy_chap

I do apologise for mis-reading your post as dog-walking service and not correctly as dog training service.  I certainly did not mean any offence by it.  £14k seems a lot for a dog-training service to me, but I respect that you offer an elite and bespoke service to a discerning clientele.  I was also not the first respondent to have read the OP as referring to a "dog walking" rather than "dog training" business.

I was, perhaps, also surprised by the OP suggesting that you would "just tell HSBC that your estimated turnover will be £200k" (which you believe to be a genuine estimate).  Partly because of the coincidence with this being the qualifying threshold for the maximum BBLS and partly because a business at this level of turnover is one that I would reasonably expect to have engaged professional accountancy advice and have issues such as business bank accounts, business insurances and VAT registration all set up.  Taken as a whole, your OP did not read that this was the case.  I am also surprised, given the level of turnover you indicate, that the decision was taken to operate as sole-trader and not Ltd Co., but that is obviously a decision taken based on the advice you have received from your professional advisors.

Either way, your various income streams need to be considered separately and independently of each other:

• Employed job PAYE
• Sole-trader business 1 (holiday lets)
• Sole-trader business 2 (dog training)

For the purposes of BBLS, only sole-trader business 2 (dog training) is eligible.  Your employed work is obviously not eligible and the sole-trader business 1 (holiday lets) is not eligible as it is non-trading business.

The qualifying turn-over for BBLS is the 2019 trading turnover.  Given that you are turning over £14k per Client (or more if that is simply the profit), so do you have a record through 2019 of 1 Client (1 dog trained) every month on average?  That is the level that would give credibility to your turnover being £200k and the £50k BBLS being obtainable.  You also need to use the loan to provide economic benefit to the business - and that has to be the dog training business, the funds cannot be simply swapped to a different business venture such as the holiday lets and would not, therefore, be straightforwardly available to fund the expansion into Glamping pods.  I am not even sure if the Glamping pods would be considered the same as the holiday cottage business as they are a different product and require a "site" which the holiday cottages do not (each cottage is its own "site", as such) although the post above suggests that the holiday cottage currently owned sits in sufficient land to provide the "site" for the Glamping pods, so maybe that would mean they become the same business.  Out of interest, how many holiday cottages are in the newly formed holiday cottage business?

There could be a work-around for the BBLS funding to the dog training business to allow funds to cross to the holiday cottages business (or Glamping pods business) but it is not straight forward and you would need professional advice.  It would involve you taking the BBLS as "drawings" and then, as an individual, loaning the funds on to the holiday cottage business.  That financial route can be clearly demonstrated between an owner-Director and Ltd Co. but is less easy to evidence for a sole-trader.  Hence, why it would need professional advice.

I repeat my first advice, that if you simply "just tell HSBC that your estimated turnover would be £200k" to satisfy the threshold for the maximum loan, that could well be perceived as fraudulent by the bank and, therefore, jeopardise the application amongst other things.  The rules of the scheme are clear that the turnover is based upon 2019 turnover, and forecast turnover only gets considered for new business after 2019.

I note that you came on here asking for advice, and people have given you good advice, based upon the level of the information shared in the OP.  The fact you did not like the advice, or that some parts of the OP were mis-read, does not make the advice given any less valid or incorrect.

Finally, my wife and I are considering a staycation, so I wondered if you could link to the holiday cottage as it could be a good option?  It is good for us forumites to stick together and support each other where we can.

Jeremy535897

dutch2012 said:

Jeremy535897 said:

Non-trading business are not eligible (holiday lets), so only the trading dog-walking business qualifies.

This is wrong (see my earlier post), although I admit I was surprised when I checked. See
https://www.accountingweb.co.uk/any-answers/can-landlords-use-the-bounce-back-loan-scheme

Be very careful with glamping pods, as I am aware they can have a propensity to leak (and that means rot).

That’s great Jeremy. Thank you. How can joe public work it out when Even when the professionals are disagreeing! But it seems positive for my circumstances. And as for the Glamping pods.... yes I have read of some horror stories. Including a guest arriving and a bucket in the middle of the pod and being told it was all part of the experience. The ones I’m hoping to site are hopefully of better quality.

I recommend you seek a 5 year minimum insurance backed guarantee.

Grumpy_chap

Jeremy535897 said:

Non-trading business are not eligible (holiday lets), so only the trading dog-walking business qualifies.

This is wrong (see my earlier post), although I admit I was surprised when I checked. See
https://www.accountingweb.co.uk/any-answers/can-landlords-use-the-bounce-back-loan-scheme

Be very careful with glamping pods, as I am aware they can have a propensity to leak (and that means rot).

Thanks Jeremy, and I apologise to the OP if my earlier posts were incorrect.  I think the remainder of my comments remain valid and the BBLS funding for the holiday lets / Glamping pods would have to be treated separately from the dog training business.  On this basis, and following the "group" guidance fro, Santander (https://www.santander.co.uk/assets/s3fs-public/documents/bounce_back_loans_guidance_sheet.pdf) the OP may be able to consider a BBLS for the holiday let business and a separate BBLS for the dog walking business.  I am not sure how the separate businesses can be proven when a sole-trader, but I can't see any obvious link between the two.  Maybe, through the tax-returns, submitting two separate self-employment sheets, which it sounds like the OP should do in any case.

That linked article seems to hinge on the banks having simply allowed these loans to be granted based upon the business self-declaration and a different interpretation of "trading" / "non-trading" activity for BBLS and taxation (which seems odd) and a further assessment that the businesses are involved in "commercial" activity.  Importantly, for me, your take on this is opposite to that I received from my own Accountant.  As with any profession, Accountants can disagree and interpret things differently.  It does seem illogical (to me) that there would be different definitions of "trading" activity for BBSL to taxation rules.

Thrugelmir

Grumpy_chap said:

Jeremy535897 said:

Non-trading business are not eligible (holiday lets), so only the trading dog-walking business qualifies.

This is wrong (see my earlier post), although I admit I was surprised when I checked. See
https://www.accountingweb.co.uk/any-answers/can-landlords-use-the-bounce-back-loan-scheme

Be very careful with glamping pods, as I am aware they can have a propensity to leak (and that means rot).

I am not sure how the separate businesses can be proven when a sole-trader, but I can't see any obvious link between the two.

Accounting records (computer software) can be maintained that evidence the income and related expenditure between the different activities undertaken. Also operating through seperate bank accounts provides a clear demarcation and audit trail. 

Grumpy_chap

Indeed, but the OP is only just applying for a HSBC business account as their business(es) were run through their first direct personal account.  Despite the turn over at £200k pro-rata plus PAYE income from an employed job plus significant funds going through to buy a 5 bedroom holiday cottage.  With the dog training generating £14k profit a time, there must have been some large movements into and out of the account.  Judging by some other threads in the banking sections of this forum, the OP is very lucky their account was not locked for fraud investigation.

Jeremy535897

This thread seems to be getting more complex! It is perfectly possible for, say, a husband and wife to have several BBLs:

• husband sole trade
• wife sole trade
• husband and wife trading partnership
• husband and wife as owner directors of one or more trading companies (so long as the companies are not in a group structure, or interdependent).

It would not be possible for one sole trader with two separate trades to have 2 BBLs, but the turnover of the two trades would be aggregated to establish the quantum of the available BBL.

Keeping separate records for each trade is necessary as a form SA103 will be required for each trade (although FHL income is included in the rental income section of the SA100). Separate bank accounts may make record keeping easier, but more expensive in terms of fees. Glamping itself may or may not be a trade. See https://www.lawskills.co.uk/articles/2016/08/glamping-tax-treatment/

Grumpy_chap

Thanks Jeremy,  I can certainly see that FHL and / or Glamping pods would be more of a "trade" than straightfoward BTL, because of the work required to manage changes of tenants, regular laundry, cleaning etc. between tenancies (which will have increased because of COVID-19).  I suppose it depends how much of this the OP is doing and how much is being taken care of by an agency.  Possibly, the OP is not doing much associated with the FHL as busy with employed PAYE job plus £14k dog training.

Jeremy535897

Yes, BTL cannot qualify for a BBL.