Support Update: VAT Deferral, Bounce Back Loan Extension and Brexit Grant

A brief update on some recent announcements in respect of both Coronavirus and Brexit support measures:

VAT Deferred from March – June 2020: Repayment Options

One of the major early Coronavirus support measures was the ability to defer VAT liabilities that fell due between 20 March and 30 June 2020, with the deferred payment date of 31 March 2021.

The current position of the pandemic and latest round of lockdowns has led the government to offer enhanced flexibility by way of an additional deferral scheme in acknowledgement that a (potentially significant) looming VAT bill could cause issues for many.

It is of course fine to pay the liability by 31 March 2021, however the new scheme allows a further interest-free deferral of between 2 and 11 months (depending on when the scheme is joined) as preferred or required.

The scheme requires opting into and agreeing with HMRC and is open for applications between 23 February and 21 June 2021, with the joining date dictating the instalment periods available (it is therefore recommended applications are made ASAP after 23 February).

Applications are to be made via the business’s own government gateway account – unfortunately as agents we are unable to apply for the scheme on behalf of clients via our agent gateway.

If your business does not currently have its own government gateway account for VAT and you’re seeking to take advantage of the scheme the advice is to set this up ASAP.

Businesses eligible for the scheme must:

• Apply for it themselves (as opposed to via their agent)
• Have a VAT liability deferred from between 20 March and 30 June 2020 to pay
• Be up to date with VAT returns
• Join by 21 June 2021
• Be able to pay the first instalment on joining
• Be happy to pay further instalments by Direct Debit

Bounce Back Loans: Pay As You Grow Scheme

The government have announced the new ‘Pay as You Grow’ scheme which is intended to provide greater flexibility and support to the 1.4m businesses who have taken out Bounce Back Loans since their inception.

The key features of the measure include:

1. The ability to extend loan repayment periods from 6 to 10 years (with the same interest rate of 2.5% applying for the duration)
2. The option to revert to interest-only repayments for a 6 month period (an option available up to three times over the repayment period)
3. A one-off option to pause repayments entirely for up to 6 months (which can happen from the first repayment date – therefore meaning no repayments need to be made for the first 18 months of the loan if desired)

All the above features are optional and flexible based on the requirements of individual businesses and do not have to be taken up either initially or at all.

Lenders should directly and proactively contact their customers with details of these measures (including the process for instigating each) at least three months prior to the due date of the first repayment following the initial 12 month repayment holiday.

SME Brexit Support Fund

The government have announced that small and medium-sized businesses (SME's) can get up to £2,000 worth of funding via the SME Brexit Support Fund to help with training or professional advice on matters which include:

• How to complete customs declarations
• How to manage customs processes and use customs software and systems
• Specific import and export related aspects including VAT, excise and rules of origin

Eligible businesses must:

• Be established in the UK
• Have been established in the UK for at least 12 months before submitting the application, or currently hold Authorised Economic Operator status
• Not have previously failed to meet its tax or customs obligations
• Have no more than 500 employees
• Have no more than £100 million turnover
• Import or export goods between Great Britain and the EU, or moves goods between Great Britain and Northern Ireland
• Complete (or intend to complete) import or export declarations internally for its own goods
• Use someone else to complete import or export declarations but requires additional capability internally to effectively import or export (such as advice on rules of origin or advice on dealing with a supply chain)

The application process is not yet open (the guidance so far is that they will open ‘next month’) however applications will likely be made via a link which will be provided here: https://www.gov.uk/guidance/grants-to-help-small-and-medium-sized-businesses-new-to-importing-or-exporting

If you have any questions regarding this or anything else please get in touch, and for regular updates, announcements and news please check our website (www.dsaprospect.co.uk) and make sure you’re following our LinkedIn page: https://www.linkedin.com/company/dsa-prospect-ltd