VAT payment holiday ends 30 June, rural firms reminded

VAT deferred payments scheme cuts off on 30 June although reduced rate may be on the way in July, Saffery Champness explains
VAT deferred payments scheme cuts off on 30 June although reduced rate may be on the way in July, Saffery Champness explains

Rural businesses have been reminded that the VAT payment holiday - which ran from 21 March because of the Covid-19 crisis - ends on 30 June.

No further extension to the scheme, which has allowed VAT payments to be deferred until 31 March 2021, is expected, accountancy firm Saffery Champness said.

However, it added there might be a reduction in VAT rates for some sectors, or generally, when the Chancellor Rishi Sunak gives his ‘Fiscal Event’ statement in July.

This would follow action taken by some European countries, including Germany.

The firm added that deferment allowed for self-assessment income tax payments that were due by the end of July, the second payment on account, to be put off until 31 January 2021.

Sean McGinness, partner at Saffery Champness, said HMRC had warned that the deferred VAT scheme would end on 30 June.

“Those who pay by direct debit and have cancelled such payments at their bank should remember to reinstate them for the next VAT return," he said.

“Where businesses foresee that they will be in difficulty making VAT payments after 1 July 2020, or the ‘catch up’ payment on 31 March 2021, they should contact HMRC at the earliest opportunity and discuss a ‘time to pay arrangement’ for further extension.”

Regarding the deferral of July self-assessment tax payments until the end of January next year, the firm has advised to make payments as normal and by the regular due date.

Martyn Dobinson, partner at Saffery Champness said: "This will help to reduce what will be significant pressure on finances early next year, with deferred VAT payments due by 31 March 2021 and interest and repayments starting to kick in on loans taken out through the government support schemes.

"Those potentially significant liabilities are also likely to come off the back of a sustained period of poor or restricted trading for many businesses.

“Getting an early handle on 2019/20 tax liabilities will also allow advance planning for payments falling due in January and July next year.”