VAT Cashflow planning: COVID-19

Tue 31 Mar 2020

In such challenging times have you had time to understand how to maximise cashflow resulting from the VAT deferral measures granted by the Chancellor? 

As at 31 March 2020 the VAT payment deferral scheme highlights are: 

• VAT payments for the next VAT return (meaning payments due between 20/3/2020 and 30/6/2020) can be deferred until 31/03/2021;
• VAT returns must still be submitted as normal, via MTD where appropriate;
• VAT registered businesses must cancel their direct debit to ensure the VAT payment isn’t taken by HMRC;
• The VAT deferral also covers payments on account and the annual accounting scheme payments.
• Repayments of VAT will be made by HMRC as normal.

The VAT deferral scheme is a welcome break for UK VAT registered business at this difficult time. It is effectively a mass Time to Pay agreement with HMRC under their Care and Management powers.

Clever Cashflow

By incorporating the VAT deferral scheme with other VAT cashflow options there is an ability for businesses to gain further short term cashflow improvements.

By carefully considering the timing of VAT credits and reliefs some businesses could pay little or no VAT for a six month period.

Get in Touch

VAT is never that simple and there are important considerations around time limits and tax points, but if you would like to understand this in more detail please speak to our Indirect VAT Team and we will be glad to assist.

Juliet Bailey Partner Juliet.Bailey@Mazars.co.uk

Sandy Cochrane Director Sandy.cochrane@Mazars.co.uk

Lorraine Lee Senior Manager Lorraine.lee@Mazars.co.uk