Following the Chancellor’s announcement of the VAT holiday Alison Horner, indirect tax partner at MHA MacIntyre Hudson, says companies still need to be wary of procedural pitfalls
“All businesses with a UK VAT registration are automatically eligible for the VAT deferral for return periods ending in February, March and April, and there is no need to apply to qualify. While this provides very welcome respite for many companies, with a revised payment deadline of March 2021, they must ensure they manage their cashflow appropriately over the next year to account for payment, and that of the upcoming tax year too. It is a deferral and the money owed will still need to be paid next year. Businesses that pay by direct debit should cancel this now – as HMRC will not automatically defer any payments made.
“Large businesses within the payments on account scheme appear to be able to defer payment for the May VAT return period as well as their balancing payment for the February return. This may not however be the Chancellor’s intention, so businesses are advised to monitor closely for further updates.
“It’s also a win that the deferral scheme has now been updated to apply to non-UK businesses and charities which are VAT registered in the UK, and the government has also extended its support to those businesses importing goods into the UK under the Duty Deferment scheme. HMRC’s willingness to discuss time-to-pay agreements on a month by month basis will be a welcome helping hand.”