Further VAT support for businesses announced

On 24 September, the Chancellor announced his “Winter Jobs Plan” and, while the headlines have mainly concentrated on changes to the “furlough” scheme and the extension of the CBIL scheme, there were also some important VAT support measures announced.

Firstly, the temporary output VAT rate reduction from 20% to 5% for the hospitality and travel sectors (covered in our article here: https://ryecroftglenton.com/2020/07/09/temporary-vat-cut-to-boost-hospitality-sector/ )has been extended. It was previously announced this would end on 13 January, but the reduced rate will instead end on 31 March 2021.

Secondly, businesses were able to defer VAT payments which fell due between 20 March 2020 and 30 June 2020. Previously, these deferred liabilities were required to be paid across to HMRC by 31 March 2021. Those deferred liabilities can now be repaid in 11 instalments, without interest being charged. The Chancellor did not announce a timescale for those payments, but it seems to be implied that the deadline will no longer be 31 March.

We will provide a further update on the deferral scheme once HMRC have released their detailed guidance.

Should you have any queries on the above changes, please do not hesitate to speak to your usual RG contact.

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