RURAL BUSINESSES have been reminded that the VAT payment holiday, which ran from March 21, 2020 because of the COVID-19 crisis, ends tomorrow, June 30.

No further extension to the scheme, which has allowed VAT payments to be deferred until March 31, 2021, is expected.

However, it is expected that there will be a reduction in VAT rates for some sectors, or generally, when Chancellor Rishi Sunak gives his ‘Fiscal Event’ statement in July. This would follow action taken by some European countries, including Germany.

Saffery Champness partner, Sean McGinness, said: “HMRC has warned that the deferred VAT scheme ends on June 30. Those who pay by direct debit and have cancelled such payments at their bank should remember to reinstate them for the next VAT return.

“Where businesses foresee that they will be in difficulty making VAT payments after July 1, 2020, or the ‘catch up’ payment on March 31, 2021, they should contact HMRC at the earliest opportunity and discuss a ‘time to pay arrangement’ for further extension.”

The firm's Martyn Dobinson added: “Regarding the deferral of July self-assessment tax payments until the end of January next year, we would advise to make payments as normal, and by the regular due date, where this can be afforded, and where funds have not already been earmarked for investment elsewhere in the business. This will help to reduce what will be significant pressure on finances early next year, with deferred VAT payments due by March 31, 2021, and interest and repayments starting to kick in on loans taken out through the government support schemes.

"Those potentially significant liabilities are also likely to come off the back of a sustained period of poor or restricted trading for many businesses," said Mr Dobinson. “Getting an early handle on 2019/20 tax liabilities will also allow advance planning for payments falling due in January and July next year.”