VAT deferral, Covid tests and the 3rd SEISS grant

It’s been hard keeping up with Government announcements recently so here is a summary of some which may be of interest to you

VAT

Businesses that took up HMRC’s offer to defer some or all of their VAT liability due for payment between 20 March and 30 June 2020 are to be given more time to pay.

Originally, the terms of the offer required the deferred VAT to be paid in full by no later than 31 March 2021.  However, because of continued tough trading conditions HMRC will allow extra time through a new scheme that it will launch in early 2021. HMRC will shortly announce further information about the scheme and how to sign up for it.  

If you have deferred VAT your options for settling it are:  

• pay in full on or before 31 March 2021

• opt in to the new VAT deferral payment scheme when it launches in early 2021; or

• make a “time to pay arrangement” with HMRC.

The new scheme will allow you to settle what you owe over a maximum of eleven monthly instalments ending no later than 31 March 2022. HMRC will not charge any interest over that period. To use the scheme you must be up to date with your VAT returns and be able to pay the deferred VAT by direct debit. You will also need a Government Gateway account as agents cannot make this request on your behalf.

Third SEISS grant

HMRC have announced the details of the third SEISS grant The grant is payable for the three month period beginning on 1 November 2020. It is equal to 80% of average trading profits, capped at £7,500. Claims can be made through the existing SEISS website from 30‌ ‌November 2020 to 29‌ ‌January 2021. Basic conditions for eligibility are that profits must have been adversely affected by coronavirus in the period from 1 November 2020 to 29 January 2021 and that the claimant must have traded in both 2018/19 and 2019/20. Note that reduction in profits due to increased costs, such as having to buy masks, does not count for the purposes of the grant.   

Additionally, claimants must confirm that they are: 

• trading but at a reduced capacity or demand, or have been previously trading but are temporarily unable to because of coronavirus

• intend to continue to trade and believe that the impact on their business will cause a significant reduction in their trading profits

Claimants must keep evidence to show the impact and reduction in their business activity over the qualifying period.

Tax free Coronavirus tests (won’t that add to Christmas cheer!)

Employees who receive coronavirus tests at work will not have to pay income tax or NI on the benefit.

A temporary tax exemption is being introduced to prevent employees suffering an income tax benefit in kind charge on relevant coronavirus antigen tests provided by or on behalf of their employer.

To qualify, the tests must be made available to all an employer’s employees generally on similar terms, and it only applies to antigen tests (that confirm whether a person currently has the virus).

The exemption applies to tests provided between 8 December 2020 and 5 April 2021. However, HMRC will refrain from collecting income tax or NI on any relevant tests which have already been provided during the current tax year.

This exemption is designed to minimise the financial burden on employees, and the Class 1A NI contributions and reporting requirements on employers who provide a relevant coronavirus antigen test.

If you would like any further information on any of the above, do not hesitate to contact us.