What the VAT deferral deadline means

VAT Deferral

The government announced a temporary, three-month VAT deferral on March 26th 2020 which is now coming to a close. 

Quarterly and monthly VAT returns for February, March and April this year or any other payments due between March 20 and June 30 2020 were deferred but are now eligible to be paid again.

Any VAT payments incurred from July 1st will be eligible for payment unless a prior arrangement is made with HMRC. Consequently, if your most recent VAT quarter ended in May, you will be required to pay your VAT on or before July 7th.

Any companies that did defer VAT payments should now set-up any cancelled direct debits again with enough time for HMRC to take payment, otherwise they could risk a late payment penalty. 

Deferment didn’t mean cancellation – any deferred VAT payments still have to be paid in full either on or before March 31st 2021, as additional payments with subsequent returns or as separate payments. If you are likely to have difficulties making your VAT payment, please contact us and we can discuss your options, including a possible time to pay agreement.

Winding up petitions and statutory demands

The issuing of a statutory demand for payment of an outstanding debt possibly followed by asking the court for a winding-up petition to be issued against a company will also be valid once again from July 1st 2020. 

There may be some initial confusion as one of the more highly promoted provisions of the new Corporate Insolvency and Governance Act 2020 is a suspension of the issuing of winding-up petitions and statutory demands until September 30th 2020.

It pays to read the small print – this only applies to debts that can be shown to have been caused specifically by the Covid-19 outbreak and response. 

For instance, a restaurant supply company that has seen its trade dry up would be protected because it could show that the hardship caused by all of its customers closing their doors at once is down to Covid-19. 

An online retailer that has continued to trade during the past three months and hasn’t paid suppliers for services would not be protected unless it could prove otherwise. 

Flexible furloughs

Stage One of the Coronavirus Job Retention Scheme (CJRS) closes on June 30th 2020 and Stage Two automatically begins on July 1st. 

Among the changes coming will be flexible furloughing and other measures designed to help employees return safely to work. 

In Stage Two, employees will be allowed to perform some work for their employer under full pay and be paid 80% of their salary for the remainder of the time. 
Also there is no minimum furlough period beyond the statutory one working week to be observed, so employers will now have additional flexibility to rotate furloughed staff more rapidly to reacclimatise them to the new working environment. 

From August 1st, the level of support under CJRS will begin to be reduced with employers starting to pay furloughed staff’s NICs and pension contributions. 
This will continue for the rest of the period with employers paying 10% of their wages up to £312.50 per week in September and 20% up to £625 per week up to October 31st when the scheme is due to end.

As well as being the last day of Stage One of CJRS, June 30th is also the last day when new applications will be accepted to the scheme too. 

High court enforcement action

As more employees start coming back to work it would be remiss of us not to mention that this also includes High Court Enforcement Officers, or bailiffs. 

We’ve previously written about how their professional body – the Civil Enforcement Association (CIVEA) – have put together working advice for how their members can function while the Covid-19 lockdown is being gradually lifted.

And it’s worth noting that as courts start to hear more cases then this follows that there will be more work for the enforcement officers to do as more judgements are passed. 

Despite the various measures included in the new insolvency act including the suspension of Commercial Rent Arrears Recovery (CRAR) notices, County Court Judgements (CCJs) can still be obtained for outstanding rent and High Court Enforcement subsequently applied for. 

High Court Enforcement Group have confirmed that whilst restrictions apply on the ability to visit residential properties until 24 August, they can now visit commercial properties and take control of goods. With the limits on other enforcement methods, it’s likely you can expect a significant increase in the use of enforcement agents to recover commercial debts in the next few months.

As Churchill sagely observed: “Now is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

There’s been a lot for business owners and directors to master regarding the Covid-19 response and a lot of it is about to change in the next 24 hours. 

If you’re worried about your business reopening and how you can keep open for the next few weeks and months then get in touch with us