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Update 7 April: HMRC has since confirmed on 3rd April that import VAT will still be payable on clearing goods coming into the UK arriving from outside of the EU. There will be no postponement of the import VAT. Businesses may therefore reconsider their sourcing arrangements as this gives goods sourced from the EU (and not the UK or non-EU) a VAT cash flow advantage until the end of June.
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After announcing the easement on 20 March, HMRC followed up with a Q&A warning direct debit payers that they must contact their banks to cancel the facility or the VAT will automatically be withdrawn in the next few days.
Other details remain confusing, including repayment dates and payments on account. Taxpayers who use mini one-stop shop returns (MOSS) are not included in the scheme.
£30bn VAT payments suspended till 30 June 2020
On 20 March, the new Chancellor, Rishi Sunak, announced a three month VAT payment deferment lasting until 30 June 2020. This amounts to a £30bn credit line for over two million businesses. The tax holiday will be automatic – see direct debit payer risk below – although businesses may still go ahead and pay now if they wish. Taxpayers do not have to notify HMRC if they intend to take advantage of the payment holiday.
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Richard Asquith is CEO of VATCalc – a VAT and technology company. A previous winner of International Tax Review's ‘Tax Innovator of the Year’ award, Richard was also VP of Global Indirect Tax at Avalara, leading the global transaction tax technology company's outsourced international VAT...