Need To Know: Your Business Updates for June 2021

  • 01 Jun 2021

Welcome to the June 2021 'Need to Know' update. You'll find the latest key information on bounce back debt, deferred VAT status, unemployment rate latest, and new eBay selling terms.

Allow firms to swap bounce back debt for employee equity, urges FSB

Giving struggling companies the option to convert emergency bounce back loans into employee equity stakes will “protect livelihoods, spur productivity and pave the way for a small business-led recovery as we seek to emerge from the deepest recession in modern history,” according to industry leaders.

FSB and Ownership at Work have launched ‘A Shares for Debt Recovery Plan’, outlining routes through which bounce back loans – 100% state underwritten facilities worth up to £50,000 launched at the start of last year’s lockdown – could be converted into EOTs in order to ensure the survival of viable businesses and help close the UK’s productivity gap.

The groups propose granting struggling small companies a time-limited amnesty under which bounce back loans would be written off in exchange for all-employee equity stakes vested in EOTs, a vehicle defined in Schedule 37 of the 2014 Finance Act. The private lenders providing the bounce back facilities would write off loans and claim their 100% government guarantees in these instances.  

The option would initially be open to borrowers which are constituted as companies by limited shares but could be rolled out to other businesses at a later date.

The groups argue that providing this option to firms would have the dual effect of protecting viable businesses and jobs whilst spurring productivity. In 2018, the Employee Ownership Association highlighted the benefits of EOTs, especially where productivity is concerned, in ‘The Ownership Dividend’. UK output per hour worked stands at 16% below the G7 average.        

Just under 90% of bounce back facilities have been provided via the UK’s biggest five banks, sparking fears that emergency loan initiatives have served to further entrench a lack of competition in the small business banking sector.


More than 1.5 million bounce back facilities have now been approved, with a collective value of more than £46.5 billion.

Over the winter, FSB warned of an impending “small business credit crunch” as the share of its membership with debt describing their borrowing as “unmanageable” soared from 13% to 40%. 

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Deadline approaching for deferred VAT status

Businesses that deferred VAT payments last year have less than three weeks left to join the HMRC VAT deferral scheme online if they want to spread the cost by paying in monthly instalments.

The online portal for the VAT Deferral New Payment Scheme closes on 21 June 2021. More than half a million businesses deferred £34bn in VAT payments due between March and June 2020.

HMRC chief executive Jim Harra is urging businesses to "act now to avoid missing out on this opportunity to spread payment of their deferred VAT across monthly, interest-free instalments".

The March, April and May joining dates have passed, but businesses can still spread their payments across up to eight equal monthly instalments, interest-free, if they join by 21 June 2021. Payments can be set up on the VAT Deferral New Payment Scheme portal.

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Unemployment rate continues to fall

The UK's unemployment rate fell again to 4.8% between January and March, when the country was under tight lockdowns, and hiring rose further in April, according to data that showed employers gearing up for the easing of curbs.

Some of the fall in the unemployment rate - the third in a row - was due to a rise in people not looking for work, with inactivity rate among men hitting a record high, echoing a pattern seen during the first lockdowns last year.


But analysts said the data showed the labour market in England was preparing for the end of many of the curbs introduced by Prime Minister Boris Johnson in January.

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New terms for eBay sellers

New terms of use for eBay have come into effect which mean sellers will be paid directly to their bank accounts rather than through PayPal.

The changes mean that while eBay buyers can still pay with PayPal, sellers will be paid straight into their bank accounts.

But some sellers say they are reluctant to use the new system and give eBay direct debit access to their personal bank accounts.

But the new terms, effective from 1 June, say the new "managed payments" system is compulsory, and the company has the power to limit or remove listings from sellers who refuse to use it.

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EU VAT reforms: Act now

On 1 July 2021, the 27 member states of the European Union (EU) will introduce sweeping reforms to the VAT obligations for B2C e-commerce sellers and marketplaces.

The  reform will mean some sellers will be able to report all their pan-EU sales on a single VAT return in their home country instead of having multiple VAT registrations across the EU. The aim is to boost cross-border online trade and promote trade across the EU’s digital single market by reducing compliance obligations.  UK has implemented VAT marketplace liabilities reforms from 1 January 2021. The 2021 EU VAT e-commerce package had been delayed, meaning it is now implemented on 1 July 2021. 

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