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Dealing with HMRC over deferred VAT payments

Early on in the pandemic, HMRC confirmed that all payments of VAT due between 20 March 2020 and 30 June 2020 could be deferred until 31 March 2021, to help businesses manage their cash flow.

Many businesses took them up on this offer, but they do need to eventually be paid!

The next few months will be as big a challenge as anything so far seen in 2020 for many businesses.

Focusing on your cash position during the remainder of 2020 should be the top priority for company directors.

Now is a good time to review your existing business plan and incorporate the repayments schedule of any CBILS, bounce back loans or VAT payments due.

We are always proactive with our clients to ensure they are clear on the dates of the deadlines for payments to HMRC to avoid penalties.

A number of tax deadlines fall between now and March 31st including deferred VAT payments (made between March 20 and June 30), self-assessment income tax payments on account and potentially your corporation tax liability.

Given that these liabilities could become payable within quick succession it means that business owners should ensure they’ve got sufficient levels of cash in their business to enable the servicing of existing debts and tax bills leaving them to focus on maintaining and growing their business during 2021

Speak to our team about structuring your tax repayments/VAT payments and ways to preserve and manage optimal levels of cash in your business.

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3 things you need to know about #Budget2020

We were looking for a budget to support businesses – jobs – and help entrepreneurs during unprecedented times.

Today’s statement by the Chancellor  goes some way towards that goal – but we will be analysing the details over the next few days and weeks to see how it impacts our clients who are running businesses in the real world where existing conditions remain challenging.

Key highlights:

£1,000 Job Retention Bonus

If you have furloughed staff – and you bring them back into the workforce through to January, you’ll be entitled to £1,000 per employee. This is badged as an ‘incentive’ for employers to re-introduce furloughed workers to their business. You should only re-introduce employees to your business when it makes commercial sense to do so.

It was confirmed today that the furlough scheme will not be extended after October.

VAT rate cut

The VAT rate cut launches next Wednesday (15 July). This rate cut from 20% to 5% on food, hospitality and tourism is welcome. The key to its success for these sectors (apart from making bills slightly cheaper) is a positive reaction from consumers. If you need guidance on the VAT rate cut please contact our tax team now.

Trainees 

In a further initiative to boost employment, the Chancellor announced a new trainee scheme for people aged 16-24 which may be of interest to some businesses. The new traineeships will provide classroom-based lessons in maths, English and CV writing, as well as up to 90 hours of unpaid work experience. Employers will be given £1,000 for each new work experience place they offer.

And finally…

There will be a new ‘Eat Out to Help Out’ scheme launched – which offers diners, through the scheme, 50% off their meals out (up to £10 per person) during August. Those hospitality businesses which offer this scheme can claim the lost revenue from the Government.

If you need advice about how today’s announcements affect your business – talk to us now.

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How to claim your VAT deferral

How to defer VAT payments coronavirus

VAT payments due before the end of June 2020 can be deferred until March 2021.

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. 

Please remember that the deferred VAT payment will eventually need be paid on or before 31 March 2021 – and VAT returns should be processed as normal.

VAT refunds and reclaims will be paid by the Government as normal.

Cancel your direct debit

However: whilst HMRC does not require you to make a VAT payment – if you pay by direct debit (and  many businesses do) YOU SHOULD CANCEL YOUR DIRECT DEBIT TO ENSURE THAT HMRC DOESN’T AUTOMATICALLY TAKE PAYMENT. 

Murray Patt says:

Many of our clients plan to make use of this VAT deferral in order to conserve cash in their business.  We are keen to remind everyone who is doing so to cancel their direct debit to avoid payment being taken.

If you have any further queries about the coronavirus VAT deferral scheme speak to Murray Patt on 0161 980 8788.

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Action required – ‘Making Tax Digital’

If you currently submit your VAT return using an Excel spreadsheet you must take action to update your process or face expensive fines from HMRC.

To comply with new ‘Making Tax Digital’ requirements you must use accredited accounting software to submit the return. We can:

  1. Guide you on upgrading your existing accounting software.
  2. Check and submit your VAT return using our specialist software for just £99 per VAT return.

Failure to comply with these new regulations could see huge fines imposed by HMRC.

We are working with all our clients to ensure they choose the best method of processing tax and VAT returns which are HMRC compliant and work best for their business.

In many cases, it is easier and more efficient for our VAT team to handle your returns. This way, you can be sure that you are compliant and also it removes the risk and hassle of doing it all your self.

To simply update the way you process your VAT returns speak to Jane Marquez in our team and she will guide you on the best option for your business.

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New VAT thresholds looming?

There had been some speculation leading up to the Budget that the VAT registration limit would be significantly reduced. The Chancellor has announced that the VAT registration and deregistration thresholds will not change for two years from 1 April 2018 from the current figures of £85,000 and £83,000 respectively.

In the meantime, the government intends to consult on the design of the threshold.

Talk to our team on 0161 980 8788 about your current VAT arrangements to ensure that you are complying in a tax effective way.

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