VAT deferral to help practices cope with coronavirus impact
Dental practices are among the businesses who will benefit from the recent government promise to delay VAT payments in light of coronavirus.
Chancellor Rishi Sunak revealed the VAT referral plan as part of a number of measures to ease the financial pressure on businesses.
He said: ‘I’m also announcing further cash flow support through the cash tax system.
‘To help businesses pay people and keep them in work, I’m deferring the next quarter of VAT payments.
‘That means no business will pay any VAT from now until the end of June and you will have until the end of the financial year to repay those bills.
‘That is a direct injection of over £30 billion of cash to businesses equivalent to 1.5% of GDP.’
Some important points for dental practices are:
- Between March 20 and June 30, businesses have the option to defer VAT payments until a later date or pay it as normal
- If deferred, businesses still need to submit their VAT returns to HMRC on time
- Additionally, the delayed VAT due must be paid on or before 31 March 2021
- VAT MOSS payments – the VAT on sales of digital services within the EU – are excluded from this measure
- If VAT is normally paid by direct debit, practices should contact their bank to cancel this payment.
In response to the impact of COVID-19, Carl Valencia, Rangewell’s director of healthcare, is urging dental practices to review their cash flow requirements.
He said: ‘I spent 18 years financing Dentists at high street banks and they were always extremely strong and stable businesses both for the business owner and the lenders supporting them.
‘COVID-19 is truly a “black swan” event financially for the profession. Dental practices should be urgently reviewing their cash flow requirements – not just for the next quarter, but for the next 12 – 18 months.
‘The tsunami of Coronavirus Business Interruption Loan Scheme (CBILS) applications will quickly overwhelm the banks so if you’re going to need finance over the next 18 months you should be making moves as quickly as possible now.
‘We’ve had discussions over the last couple of weeks with the high street banks, mainstream lenders and newer niche lenders. These show lenders still consider dentistry a very creditworthy profession and are still lending.’