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How does Virus VAT deferral scheme work?

Are there regulations or guidance on the VAT deferral scheme?

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Is there any guidance on the scheme apart from here: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-... ?

I have a client on monthly VAT returns. They are normally in a repayment situation with occasional high value outputs and therefore VAT payments.

One of these high value outputs will occur this month and fall into the VAT deferral period which is good news. However how are the subsequent repayment periods, which will recommence next month, dealt with? Are they:

  • Repayable as they occur?
  • Offset against the liability?

The guidance in the above link reads as if a) applies but, even in these generous times, I find that surprising.

What then happens if there is another big output month after the end of the deferral period?

  • Does it just get paid as usual?
  • Does it top up any offsets made against the deferred liability?

OK - the last is probably a bit of a daft question; I am sure it will just be paid as usual but there are a large number of possible variations/interactions with all of these amounts depending on the order of when they occur and their value.

All of which will no doubt become clearer in due course but unfortunately the bank need the forecast by Monday and these issues have big effects on the cash flows.

Of course, if the output slips into the beginning of May as it could easily do, it all becomes academic as it will be outside the deferral period unless they extend the scheme period.

Replies (3)

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By Matrix
18th Apr 2020 10:26

This is a good question. I would assume that the VAT is deferred so should not reduce the repayment. However in practice I expect it will reduce the repayment and you will have to call up to get it sorted, which could take a while so maybe use the worst case scenario.

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By Wanderer
18th Apr 2020 10:46

I've searched and can't find any legislation at all.

Based on the guidance I'd say:-
Q1 Repayable as they occur.
Q2 It just gets paid as usual.

Think I'd ensure that the d/d was cancelled, putting you in control, and make the payments fitting in with the guidance.

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By paulwakefield1
18th Apr 2020 11:32

Many thanks to you both and especially so for replying on a Saturday. Have opted for 2 worst case scenarios - the worst worst case is that they miss the deferred period completely.

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