We are finding that the lockdown is having a range of implications regarding taxpayers’ VAT Returns.
If you are responsible for preparing clients’ VAT Returns, do watch for these issues … and I am confident many more will arise.
the three-month rule for export or removal of goods, which is a condition of zero-rating. The Chancellor has relaxed this rule, and you can find guidance in VEXP30310.
the 12-month rule for re-entry into the Flat Rate Scheme – if this period overlaps with the lockdown, this might facilitate re-entry into the FRS.
the proportions of taxable and exempt income might be distorted, for example, where one income stream disappears – this will affect clients subject to Partial Exemption, or Charities using a business : non-business apportionment.
where the client wants to use the reduced rate for certain residential renovations and needs to satisfy the first AND second rules (empty for 2 years & carry out works within 1 year) – this will apply where the client has or intends to occupy the property.
Where an adjustment is required under the change of intention rules (payback & clawback) – again the income may be distorted; or the expected selling price, if that is a factor.
As always, keep a file note to evidence any relevant information.
There is also the question of whether a business whose income has entirely or almost entirely disappeared and whether he should deregister for VAT. There is a separate forum post on that question.