Accounting for C-19 advance payments

Accounting for C-19 advance payments

March 18, 2021

From April to July 2020 community pharmacies received a cumulative £370m in incremental advances. These advances were loans to ease cashflow pressures while more formal data gathering and assessment of the costs of dealing with the COVID-19 pandemic were collated. The advances were not ‘new money’ for the sector and it was clearly stated that the payments would need to be reconciled at a later data subsequent to negotiations between DHSC and PSNC. PSNC is calling for the loans to be written off, based on our analysis of the impact of COVID-19 on the sector, but the negotiations are currently still ongoing and it is not known whether any of the advances will have to be repaid or how this would be done.

In the meantime, we have received questions from contractors who will need to discuss how to account for these loans at their year-end with their accountants or auditors. PSNC’s professional advisors have stated that they would expect that advances would be kept on a contractor’s balance sheet as creditors, and that in general loans are not subject to corporation tax. However PSNC cannot give formal tax advice and so if you are unsure about how you should account for the advances please seek advice from a professional.


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