Covid-19 VAT Updates
To assist throughout this difficult period, the UK Government has made a wide range of reliefs available for businesses and individuals alike. The Chancellor has announced that VAT payments will be deferred between 20 March and 30 June 2020. Businesses taking up this option will be given until the end of the financial year to clear any VAT due which is not paid in the suspension period.
It is important at this time for businesses and charities to stay abreast of VAT updates from HMRC. This page provides a synopsis of the announcements which have been made as well as coverage of topics which we think businesses and charities may wish to consider. We will continue to update this page as the situation progresses. If you would like to discuss any of the options available to your business or charity to assist in this difficult period, please do not hesitate to contact Constable VAT.
14 April 2021
If you deferred VAT payments due between 20 March 2020 and 30 June 2020, you can arrange to pay in instalments. HMRC has now updated its guidance to clarify “You may be charged a 5% penalty or interest if you do not pay in full or make an arrangement to pay by 30 June 2021.”
23 March 2021
HMRC has announced that it will be using an accelerated process to make sure coronavirus-related changes to partial exemption methods are considered, and where appropriate, approved swiftly. Check the new guidance to find out where to send PESM change requests relating to Covid-19 here.
10 March 2021
If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you can join the new repayment scheme from 10 March 2021. The new scheme lets you:
- pay your deferred VAT in equal instalments, interest free
- choose the number of instalments, from 2 to 11 (depending on when you join.
3 March 2021
HMRC has released Revenue & Customs Brief 2 (2021). This brief sets out the changes in the VAT treatment of certain supplies of hospitality, hotel and holiday accommodation, and admission to certain attractions as announced at Budget 2021.
23 February 2021
Opt-in to the new repayment scheme has now been opened. The new scheme lets you:
- pay your deferred VAT in equal instalments, interest free
- choose the number of instalments, from 2 to 11 (depending on when you join)
For registration and further information, see HMRC guidance.
9 February 2021
Opt-in to the new repayment scheme has now been announced and will be open from 23 February up to and including 21 June 2021. If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you’ll be invited to join the new payment scheme later in March 2021. Find out more here.
2 December 2020
Businesses which have deferred VAT payments under Coronavirus exceptions will be given the choice to opt into a new scheme allowing them to pay back VAT in 11 instalments, interest free, before the end of March 2021. Opt in will start at a future date.
2 November 2020
The extended time limit (90 days) for notifying an option to tax land and buildings has been extended to decisions made between 15 February 2020 and 31 March 2021. HMRC’s guidance can be read here.
24 September 2020
The Chancellor has given a statement outlining new and revised measures which are being introduced to assist businesses through the ongoing COVID-19 outbreak, including an extension to the temporary reduced rate for hospitality and tourism and allowing businesses which have deferred their VAT payments more time to clear their VAT debt. Read our coverage here.
9 September 2020
Constable VAT has received enquiries from many businesses asking about how the temporary reduced rate of VAT for certain supplies of hospitality, hotels and holiday accommodation applies to their operations. One of the most common areas of confusion is in relation to wedding packages. Here we discuss how the temporary VAT reduced rate interacts with wedding packages.
18 August 2020
Since the introduction of this temporary reduced rate, we have been asked many questions and there is some confusion as to when it actually applies. This piece discusses the Guidance as it stands and aims to assist taxpayers in identifying the key points to consider.
9 July 2020
The Chancellor made some important announcements regarding VAT in his ‘A Plan for Jobs’ Speech. We have summarised these here including the temporary reduction in VAT for certain sectors such as hospitality and tourism.
28 May 2020
HMRC has revised its temporary change to the time limit for notifying an option to tax. Taxpayers still have 90 days to notify HMRC. However, this measure now applies to decisions to opt made between 15 Feb and 30 June 2020.
22 May 2020
If you or your business have been affected by coronavirus (COVID-19), HMRC will give you an extra 3 months to appeal any decision dated February 2020 or later. Send your appeal as soon as you can, and explain the delay is because of coronavirus.
15 May 2020
As a result of COVID-19, it has been difficult to notify HMRC about options to tax. Taxpayers now have 90 days to notify HMRC of an option to tax, rather than the usual 30 days. This applies to elections being made between 15 Feb and 31 May. The Guidance can be read here.
14 May 2020
HMRC has released guidance to assist businesses which may struggle to meet the time limit for removing the goods from the UK which must be met in order for the export to be zero-rated. The guidance details when HMRC may waive the formal requirements and can be read here.
30 April 2020
HMRC has released a Brief announcing changes to UK VAT, introducing a temporary zero rate for supplies of PPE for use for protection from COVID-19. The zero-rate applies from 1 May to 31 July 2020. Revenue & Customs Brief 4 (2020) contains the details on what types of goods are considered PPE.
HMRC has also announced that the zero-rate for electronic publications, originally intended to take effect from 1 December 2020, will now be applicable from 1 May 2020. The types of publication which qualify for the zero-rate are listed in HMRC’s Guidance.
21 April 2020
HMRC has updated VAT Notice 701/57: Health Professionals & Pharmaceutical Products, adding EEA health professionals to the list of “relevant practitioners” for the purposes of zero-rating certain supplies.
15 April 2020
HMRC announce that the service of new legal proceedings and pre-action letters on HMRC should be via email during the COVID-19 pandemic. New legal proceedings which are required to be served on the Solicitor for HMRC should be sent to email@example.com.
10 April 2020
The CIOT advised that HMRC has announced that Duty deferment account holders who are experiencing severe financial difficulty as a result of Covid-19 and who are unable to make payment of deferred customs duties and import VAT due on 15 April 2020 can contact HMRC for approval to enter into an extended period to make full or partial payment, without having their guarantee called upon or their deferment account suspended. The account holder should contact the Duty Deferment Office 03000 594243 or by email firstname.lastname@example.org or the COVID-19 helpline on 0800 024 1222. Account holders will be asked to provide an explanation of how Covid-19 has impacted their business finances and cash flow.
Duty Deferment account holders will be able to use their accounts during the extended payment period agreed unless they default on a subsequent payment in that period, in which case HMRC may consider suspending their account. The outstanding payment will not affect their duty deferment limit so they will not need to increase their guarantee to cover the outstanding payment. Where HMRC agree to an extended payment period, interest will not be charged on the outstanding payments provided they are paid in full by the agreed date.
Further information can be found here.
8 April 2020
COVID-19 Answers to your VAT questions and other useful information
Constable VAT has produced a useful document summarising VAT measures in place and highlighting other useful points (updated 21 May 2020).
7 April 2020
COVID-19: European VAT Awareness
We have updated our European VAT Awareness document to reflect the ongoing implementation of different VAT measures across Europe. UK, Norway, Ireland, Italy and The Netherlands have all been updated.
3 April 2020
Help and support if your business is affected by coronavirus (COVID-19)
HMRC has announced a new webinar! Register for the free to learn more about the support available to help businesses deal with the economic impacts of COVID-19.
Import duty and VAT on medical supplies, equipment and protective garments (COVID-19)
Find out how to import protective equipment, relevant medical devices or equipment brought into the UK from non-EU countries VAT and duty free during the coronavirus (COVID-19) outbreak.
COVID-19: European VAT Awareness
As the ongoing situation with COVID-19 continues to impact businesses, charities and individuals alike, European countries have implemented various measures to assist in reducing the financial consequences. This newsletter aims to provide a synopsis of the VAT related measures being taken in different Member States to aid those struggling to meet financial obligations.
Making Tax Digital Update
HMRC has announced that, due to the impact of COVID-19, businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place. This is a 12 month extension.
VAT Payments on Account
HMRC has updated its Guidance around VAT payments on account. VAT payments due between 20 March 2020 and 30 June 2020 can be deferred. If you choose to defer a VAT payment, it must be paid on or before 31 March 2021.
Cash Flow Considerations: VAT Cash Accounting
Businesses and charities can encounter cash flow issues for a variety of reasons. This blog covers one VAT scheme that can be helpful when considering cash flow problems arising as a result of customers who do not pay on time. The VAT Cash Accounting Scheme is available to some businesses and allows payment and recovery of VAT based on payments rather than invoices. This can be useful if customers are slow to pay and your business pays more VAT than it recovers.
Due to COVID-19, HMRC are currently unable to process applications for Non-Statutory Clearances which are made by post. Applications should be submitted to email@example.com
Stay on First Tier Tax Tribunal Hearings
Due to Covid-19, the FTT has announced a stay on all cases for 28 days from 24 March 2020. Time limits in any current proceedings are extended by 28 days. To discuss your VAT appeal please contact Constable VAT.
Constable VAT COVID-19 Preparedness and Response plan
Follow the link to see Constable VAT’s plan to continue delivering our services to our clients throughout the ongoing situation.