Pay VAT Deferred Due To COVID 19 - McGinty Demack here to help

Pay VAT Deferred Due To COVID 19


Pay VAT Deferred Due To COVID 19- What you need to know.

A lot of businesses will have taken up the option given by the government to defer VAT that was due between 20th March 2020 and 30th June 2020.

The time to pay this deferred amount is almost arrived but you do have options to consider that may help your current cashflow and financial position.

A new VAT deferral payment scheme will open on the 23rd February offering businesses extra help to meet the liabilities that are coming due.

Pay VAT Deferred Due To COVID 19

Dates Open

The new scheme is open from 23rd February to 21st June and lets you:

  • Pay your deferred VAT in equal instalments interest free
  • Choose the number of instalments from 2-11.

Pay VAT Deferred Due To COVID 19-How Do I Apply?

  • You must join the scheme yourself we as your agent cannot do this for you
  • Obviously you have to have a liability that is due for the above deferred period
  • Be up to date with your current VAT returns
  • Join the scheme by 21 June 2021
  • Pay the first instalment when you join
  • Pay your instalments by preferably direct debit

How Long Can I Pay Over?

The date you join the scheme dictates how long the payments can be over:

JOIN DATE NUMBER OF INSTALMENTS
19 March 2021 11
21 April 2021 10
19 May 2021 9
21 June 2021 8

 

The sooner you join the more flexibility you have.

If you join this scheme it does not stop you having other time to pay arrangements for other HMRC debts

How Do I Join The Scheme?

Ideally you should do this online through your Government Gateway account.

  • Create or log into your gateway
  • Make sure there are no outstanding returns from the last 4 years
  • Ensure any errors if any exist are corrected
  • Make an application online

If you want to join the new scheme but cannot use the online service then you can contact the COVID helpline when the scheme opens on 0800 024 1222.

Pay VAT Deferred Due To COVID 19- Act Now

Your options on the VAT you owe are:

  • Pay the deferred VAT in full on or before 31 March 2021
  • Join the new VAT deferral scheme

If you do not take up one of the above options, then you may face interest or penalties.

Full details are available https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19

If you need clarification on any of the above points either in confirming the new scheme will be applicable to you or help in getting old returns up to date please contact us ; info@mcgintydemack.co.uk or call 01942 322767.

You can find more information about VAT here

VAT Reverse Charge New Rules 2021


Construction Accountancy
Accountants and Tax advisors specialising in providing help to the construction industry

New Rules VAT Reverse Charge

The VAT Reverse Charge New Rules 2021 for sub-contractors and building contractors will soon take effect. From 1st March 2021, the VAT reverse charge will change how you have typically been accounting for VAT. How you layout information on your invoices to clients and prepare your VAT returns may change.

The VAT Reverse Charge New Rules 2021 – What is it?

It is where the supplier of construction services does not account for VAT, but the end-client does. The reverse charge means the customer receiving construction services must pay the VAT to HMRC, opposed to the company supplying the service. The end-user will have to recover VAT subject to the standard HMRC procedures.

How will the new rules be applied?

From 1st March 2021, these VAT Reverse Charge New Rules 2021 apply to standard rate VAT or reduced-rate construction services provided by VAT registered companies. If the supplies of service are zero-rated, the reverse charge will not apply. Suppose you or your business don’t make an onward supply of construction services. In that case, you are the end customer, and standard VAT rules are applicable.

If your invoices have CIS and non-CIS registered materials, the new reverse charge will apply to the entire invoice total.

What do you do if you are a sub-contractor?

If you’re invoicing a customer (or contractor) in a supply chain. In that case, you’ll either have to apply the reverse charge or charge VAT as usual. If it’s the reverse charge, the total of your invoice will not include VAT.

The invoice has to state to your contractor or customer that the reverse charge rules have been applied, showing the total amount of output VAT applied (20% if it’s the standard rate of VAT). Your contractor or customer will then need to include that amount on their VAT return. You don’t have to include the reverse charge on your VAT return.

What do you do if you are the main contractor?

If you are the main contractor receiving a VAT reverse charge invoice from a sub-contractor, you should continue to record it as an ordinary expenses invoice and include the input VAT on your next VAT return.

HMRC Guidance https://www.gov.uk/guidance/how-to-use-the-vat-reverse-charge-if-you-supply-building-and-construction-services

We have created a standard invoice template so you are able to visualise what your invoice should look like under the new rules. To download please click here

You’ll also have to account for the reverse charge VAT that your sub-contractor has informed you about. The overall effect on your VAT liability will be neutral as the input VAT covers the output VAT.

If you believe the new reverse charge VAT rules apply to your business, contact us today, we’re here to help you every step of the way. Email us at info@mcgintydemack.co.uk or call 01942322767

Supreme Court backs small firms on business interruption claims


The UK’s Supreme Court has found in favour of small firms receiving payments from COVID-19 business interruption insurance policies.

The test case was brought against insurers by the Financial Conduct Authority (FCA). The ruling means that thousands of small businesses are now set to receive insurance payouts covering losses from the first national lockdown.

Commenting on the ruling, Flora Hamilton, Financial Services Director at the Confederation of British Industry (CBI), said:

‘At such an uncertain time, this court case provides much-needed clarity to companies across the UK, and relief for smaller firms struggling with cashflow.

‘This is significant news for insurers, and regulators will need to work closely with the industry as policies, products and processes are updated to reflect this ruling.’

Internet links: CBI article  FCA news

Government urged by CBI to act on COVID business support ahead of Budget


The Confederation of British Industry (CBI) has urged the government to provide more financial assistance to businesses affected by the coronavirus (COVID-19) pandemic ahead of the Budget on 3 March 2021.

The business group has outlined support measures required to help protect UK businesses through the spring. It has called for:

  • an extension of the Coronavirus Job Retention Scheme (CJRS) beyond April to the end of June
  • a lengthening of repayment periods for existing VAT deferrals until June 2021; and
  • an extension of the business rates holiday for at least another three months.

The CBI has also called for an announcement of details of the successor of the Coronavirus Business Interruption Loan Scheme (CBILS).

Tony Danker, Director General of the CBI, said:

‘The Budget comes at a crucial time for the UK. The Government’s support from the very start of this crisis has protected many jobs and livelihoods, and progress on the vaccine rollout brings real cause for optimism.

‘But almost a year of disrupted demand and extensive restrictions to company operations is taking its toll. Staff morale has taken a hit. And business resilience has hit a sobering new low.

‘The Government must once again stand shoulder-to-shoulder with businesses to underwrite support for the duration, helping viable enterprises to last the course.

‘Many tough decisions for business owners on jobs, or even whether to carry on, will be made in the next few weeks. If the Government plans to continue its support then I urge them to take action before the Budget which is still more than six weeks away.

‘The Government has done so much to support UK business through this crisis, we don’t want to let slip all the hard work from 2020 with hope on the horizon.

‘The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop, but tail off over time. Just as the lifting of restrictions will be gradual, so must changes to the Government’s sterling support to businesses.’ 

Internet link: CBI article

Scottish Land and Buildings Transaction Tax


As part of the Scottish Budget, Finance Secretary Kate Forbes also announced changes to Land and Buildings Transaction Tax (LBTT) which apply from 1 April 2021.

The Scottish Government’s stated policy priority for residential LBTT remains to help first-time buyers and to assist people as they progress through the property market. The current rates and bands which apply until 31 March 2021 are as follows:

Residential property (£) Rate (%)
0 – 250,000 0
250,001 – 325,000 5
325,001 – 750,000 10
750,001 and over 12

For transactions with an effective date on or after 1 April 2021 the rate bands will return to:

Residential property (£) Rate (%)
0 – 145,000 0
145,001 – 250,000 2
250,001 – 325,000 5
325,001 – 750,000 10
750,001 and over 12

The rates apply to the portion of the total value which falls within each band.

First-time buyer relief

The relief for first-time buyers of properties up to £175,000 will resume its effect by increasing the residential zero tax threshold for first-time buyers from £145,000 to £175,000. First-time buyers purchasing a property above £175,000 also benefit from the relief on the portion of the price below the threshold. According to the Government, those buying a property for more than £175,000 will receive relief on the portion of the price below the threshold and benefit from savings of up to £600.

Higher rates for additional residential properties

Higher rates of LBTT are charged on purchases of additional residential properties, such as buy to let properties and second homes. Although these are the main targets of the higher rates, some other purchasers may have to pay the higher rates.

The Additional Dwelling Supplement (ADS) potentially applies if, at the end of the day of the purchase transaction, the individual owns two or more residential properties. Care is needed if an individual already owns, or partly owns, a property and transacts to purchase another property without having disposed of the first property. An 18-month rule helps to remove some transactions from the additional rates (or allows a refund). The ADS is charged at 4%.

Internet link: GOV.SCOT publications

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