Simplifying VAT Rules: New Amendment to Help Businesses with Final Returns

In a recent move, the UK government has introduced an amendment to the Value Added Tax (VAT) regulations, specifically targeting the process of submitting final returns when businesses deregister for VAT. The amendment aims to address certain administrative challenges and ensure smoother operations for businesses.

What's Changing?

Under current rules, businesses have a tight deadline of one month and seven days after their VAT registration is cancelled to submit their final VAT return. However, delays in processing cancellations can sometimes leave businesses scrambling against the clock, risking penalties if they can't meet the deadline.

The new amendment allows His Majesty’s Revenue and Customs (HMRC) to extend the deadline for submitting final returns. This gives businesses more breathing room if there are delays in processing their deregistration.

Why the Change?

The amendment doesn’t change the policy itself but provides a legal framework for HMRC’s existing practice of extending deadlines when necessary. Previously, these extensions were granted as a form of administrative concession, but now they have a formal legal basis. This ensures fairness and prevents unnecessary penalties and interest charges for businesses affected by administrative delays.

Impact on Businesses

The amendment is designed to be business-friendly, particularly benefiting those facing deregistration. It ensures that no additional burdens are placed on businesses, charities, or public bodies. Importantly, it has no significant impact on small or micro businesses since it merely formalises an existing practice.

Consultation and Guidance

Given that this change merely formalises what was already happening in practice, no public consultation was deemed necessary. Additionally, no new guidance will be issued, as the amendment confirms the existing treatment of final VAT returns.

Conclusion

This amendment to the VAT regulations is a positive step towards more flexible and fair treatment of businesses during the deregistration process. By codifying the discretionary extension of deadlines, the government is helping to ensure that businesses are not unfairly penalised due to administrative delays. Keep an eye on the official government website for more detailed information and updates related to this amendment.