New VAT payment scheme

In light of further COVID-19 restrictions to the tourism, leisure and hospitality sector announced earlier in the week, the Chancellor has tempered some of the pain with further VAT measures in his Winter Economic Statement.

VAT reduction

A welcome announcement in the Winter Economic Statement was an extension to the temporary reduced rate of VAT from 12 January 2021 to 31 March 2021. Tourism, leisure and hospitality businesses affected should already be aware of the reduced VAT rate of 5%, given the initial VAT change took effect from mid-July, however, anyone with concerns can contact our VAT expert.

VAT payment scheme

In addition, the Chancellor has taken the opportunity to address the major concern of VAT deferral scheme payments crystallising on 31 March 2021 at the end of what is expected to be a hard winter. It was our expectation that many businesses would be looking to request Time to Pay arrangements with HMRC. The Chancellor has pre-empted this by announcing that VAT payments can be spread over 11 months, interest free.

Any businesses which are struggling to meet their VAT liabilities, or are concerned that the proposed payment plan will not go far enough, should contact our VAT expert, Steve Chamberlain, for further support.

You can read more about the new measures in our summary of the Winter Economic Statement.

To discuss this further, please contact your usual Monahans representative or call your local office.