Update
Clearly VAT is not high on people’s agendas at the moment, but it may be a concern if a business is struggling to pay it in these difficult times.
The government has announced that, along with other measures to reassure and assist business, an easement for paying VAT due. Taxpayers may now defer VAT payments.
Measures
The details:
- the next quarter’s VAT has been deferred to the end of the tax year
- no business will pay any from now until the end of June
- all UK businesses are eligible
- the deferral does not cover payments due under the VAT MOSS scheme
- no penalties or interest will be due on the tax deferred under these measures
- this represents a circa £30 billion cash boost for business
- unlike some other countries, the deadline to submit returns has not been deferred – which is unfortunate given the virus’ effect on staff and administrative processes
- additional resources have been allocated to deal with time to pay (TTP) applications
- the regular inspection of businesses has been suspended until further notice
- there has been no announcement on the temporary reduction of VAT rates – but this may happen in the near future
- all proceedings in UK First Tier Tribunal (FTT) are stayed for 28 days
Access to the scheme
This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by HMRC as normal.
Businesses who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. This must be done in sufficient time so that HMRC do not attempt to automatically collect on receipt of a submitted VAT return.
Commentary
These are very welcome easements for business and the speed and clarity of the statements are very welcomed and should be commended.