In light of the impact on business from the coronavirus, the government announced that the next VAT quarterly payment could be deferred for up to 3 months.
This means your businesses won't need to make pay the VAT due for the coming quarter (April–June 2020) until the end of the 2020–21 tax year (i.e. next April).
This is essentially a cash loan for your business from HMRC. VAT for the 3rd quarter of 2020 (July–September 2020) is currently still payable at the end of September 2020.
For more details on how to defer VAT payments, take a look at the gov.uk Deferral Of VAT Payments webpage.
Struggling to pay other taxes?
- Time to Pay – PAYE and NIC payments delay
HMRC also have special arrangements available for businesses in financial difficulties with outstanding tax liabilities. You may be able to agree deferred PAYE and NIC payments for any staff you might employ under HMRC’s emergency ‘time to pay’ regime.
These arrangements are agreed on a case-by-case basis and are tailored to the individual circumstances of each business. You’ll be eligible if your business pays tax to HMRC and is going to struggle to meet the next payments and keep going.
Call HMRC’s dedicated helpline to agree arrangements with HMRC on 0800 0159 559 – or to find out more about the scheme, check the gov.uk Tax Helpline To Support Businesses Affected By Coronavirus (COVID-19) webpage.
- Payment on account
Individuals who pay on account can defer July’s installment and pay it at the end of January 2021 instead. No penalties or interest will be charged to those who defer.
Find out more about all these various measures on the gov.uk Covid-19: Support For Businesses page.
We all encounter VAT everyday – as consumers and as businesses. Mostly, we tend to think of it somewhat resentfully, as something extra that we have to pay (or to charge, as a business). Then there are the additional VAT returns… Many small businesses try to avoid charging VAT on their services, relying on the statutory revenue threshold below which, it’s not mandatory to register for it.
But VAT can be a positive benefit for small businesses, enabling you to recover VAT charged to you for all manner of supplies that you need in your business, from office equipment, rental and service charges to agency costs, advertising spend, contractors and advisory fees. Still, if you’re not registered, you can’t claim that potentially quite substantial sum back.
With so many on and off-line choices for how you manage recording VAT owed and submitting your VAT returns too, today, it’s never been easier to get registered and start claiming money back.
Since he and his colleagues are expert at affordable small business accounting solutions, (including a non-fuss subscription service that includes gets getting you VAT registered and managing your VAT returns), we asked Boffix’s Aaron Patrick to share the key things that we should all know about VAT, and how to save money, anxiety and effort by following the guidance that he’s set out here.
We asked Aaron how well small businesses are doing when it comes to complying with the UK’s VAT regime
“We have just had a recent flurry of requests for help with VAT registration, these have been for varying reasons, but most surprising are those we are having to register suddenly and potentially even late,” Aaron told us.
“If you have to register for VAT, but you don’t, you will still have to pay the VAT due from the time that you should have registered. HMRC may also charge you a penalty based on how much VAT is payable, and how late your registration is.”
So, if you’re growing and your revenue is increasing, keep a beady eye on how close your revenue is getting to the statutory threshold for mandatory VAT registration.
“This is something you must review regularly, “Aaron advises. “It’s not a once a year, or every now and then assessment. HMRC operates a rolling 12-month period for the purposes of VAT assessments, meaning that irrespective of your accounting reference date or any equivalent reporting duties, if you suddenly start bringing in revenue that takes you over the threshold, then like most other businesses (there are some exceptions), you must register for VAT, and start charging, VAT on your products or services.”
So, why you might you need to register for VAT now?
The most common reason is that you’re supplying goods or services within the UK, your revenue from which is close to HMRC’s statutory threshold for mandatory registration.
If your turnover of VAT taxable goods and services for the previous 12 months (on a rolling basis) is more than the current registration threshold of £85,000, or you expect it to go over that figure in the next 30 days, you must register for VAT.
Other reasons to register are listed below:
- Taking over a VAT-registered business from someone else.
- Receiving goods from other countries in the European Union (EU).
- Supplying goods or services from the UK to other countries.
- Supplying goods or services to the UK from other countries.
- Voluntary Registration – sometimes you can gain a huge benefit in Voluntary Registration, claiming back all the VAT that you’ve paid on items and services for your business
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