Coronavirus – VAT relief for businesses – UK

• United Kingdom

• Coronavirus - Tax issues
• Tax planning and consultancy

03-04-2020

On 26 March 2020, the Chancellor Rishi Sunak proposed a package of tax measures relevant to UK businesses, large and small to help ease the pressures we face from the impact of COVID-19.  One of the measures in force, is the deferral of value added tax (“VAT”) payments which are due between 20 March and 30 June. HM Revenue & Customs (“HMRC”) issued their guidance on the measure on 26 March 2020.

But what does this mean for your business?

What is the measure?

UK VAT registered businesses may choose to either pay VAT through their VAT returns as normal, or delay the payment until a later date – the last date to pay being 31 March 2021 (the end of most businesses first VAT quarter). 

The cash flow benefits that this measure brings could be invaluable during these unprecedented times, but be mindful that your VAT liability could be significant come March 2021.

What do I have to do? 

• You do not need to notify HMRC that you are deferring your VAT payment;

• You must cancel your direct debit with your bank in order to stop payments going out;

• This measure applies to VAT payments that are normally made on account (i.e. if you operate quarterly VAT returns); and

• You must still submit your VAT returns to HMRC on time.

Please note that businesses operating the VAT MOSS scheme will not be able to access this measure for now.  VAT refunds and reclaims will still be paid by HM Revenue & Customs.

If you need any more information on the impact of COVID-19 on your VAT accounting, please get in touch.