Accounting treatment for support schemes

Published: Thursday 11 June 2020

With so many support schemes and funds available to businesses during the pandemic, we have provided an overview of accounting for these and any steps you need to take next.

Business rates holiday: No grant is being given or paid to any business and it is just a reduction of business rates to zero.  Therefore, unless you have already recorded rates in your accounting software and now have received a credit note to process, there is nothing further to do.

Coronavirus job retention scheme (CJRS): This is treated as a Government grant in the accounts and therefore on receipt it should be recorded in a separate code in your accounting software.  In addition, if your year end falls within in the CJRS period (ie between 31 March and 31 October), then the accounts will need to include an adjustment for the claim amount expected for the relevant period if not received by your year end.  Of course, Hazlewoods will deal with any such calculations when we prepare the accounts if you have not already actioned this.

Coroanvirus business interruption loans (CBILS): As the Government is paying any interest and fees for the first 12 months, depending on how the finance agreement is worded will determine how the loan is recorded in the accounts in terms of the amount of interest element. Please ensure that the full finance agreement is provided to us when we prepare your accounts so that we can determine the correct approach.

Bounce back loans:  Similar to above, therefore please ensure you provide the full finance agreement to us when we prepare your accounts.

Rent holiday: Potentially any rent holiday should be spread over the remaining term of the lease by using accruals or prepayments, rather than the current year profit and loss showing a reduction for the total rent holiday.  However the accounting treatment is still being discussed by those that govern accounting policies in UK and a decision is pending.  Hazlewoods will ensure the correct treatment is applied when we prepare your accounts.

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Phil Swan
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Suzanne Headington
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Mark Harwood
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