The PM announced on Friday a VAT deferral to support UK businesses in this unprecedented time. The deferral will hopefully help many businesses to stay afloat during this difficult period, but it is worth reminding all businesses that this will not abolish any VAT due, it will simply defer the date it is due for payment and exists to help those in financial difficulty or hardship. To summarise how this deferral will work in practice:
- There is no need to apply for this deferral, all UK businesses are eligible.
- The deferral period will run from 20 March 2020 – 30 June 2020. Any VAT which would be due for payment in this period can be deferred for payment at a later date.
- All VAT relating to the deferred period (20 March 2020 – 30 June 2020) must be paid to HMRC by the end of the tax year
- Whilst the published guidance is not explicit, it is understood that the deferral applies to the net payment due.
How could this affect the NHS?
This measure is unlikely to have an effect on the NHS as they are usually in a net reclaim position (i.e. they claim back more VAT from HMRC than they pay). Whilst an extension to the year-end deadline for COS VAT recovery has not yet been announced, it is hoped that it will be in the coming days to further relieve any unnecessary pressure on the NHS at this time
If you have any questions about the deferral, and what it means for your organisation please don’t hesitate to contact us.