Alan Pearce, VAT partner at Blick Rothenberg, said: “The Governments monthly tax revenue statistics reveal that in the month of April 2020 alone, when VAT revenues would normally be expected to be around £13bn, this has been completely wiped out with a net refund of VAT paid to businesses of almost £900m. This is clearly a result of the Government’s VAT emergency measures that have allowed all businesses to defer VAT payments that were due to paid between 20 March and 30 June 2020.
“Therefore, similar shortfalls in the Government’s VAT receipts must be expected for the next two months. Businesses will be expected to make up these payments before 31 March next year. However, one wonders how many businesses will still be trading by then.”
Property transactions fall
Sean Randall, Stamp Duty partner, said: “The statistics released today show the extent of the fall in property transactions during the full month of April and its impact to the Exchequer. In April, there were just over 38,000 completions over £40,000, compared to almost 90,000 in the same month last year and 86,000 in March this year. Already, taking into account just one month of lockdown, the Stamp Duty revenue for the 12-month period ending last month has fallen by 6.32% compared to the same period last year.
“Our experience is that sector activity seems to be increasing, albeit from a low base, but we expect the drop in revenue for the 12-month period ending next month to be even greater. If that is right, pressure will surely build on the Government in the run-in to the Autumn Budget for some type of Stamp Duty stimulus to lift the handbrake for a temporary period.”
Fall in Government’s tax and NIC receipts
Robert Salter, Senior Advisor, said: “The lockdown and the resulting rise in joblessness has, as expected, created a significant fall in the Government’s tax and National Insurance Contribution (NIC) receipts. In comparison with the same month last year, April 2020 saw PAYE receipts fall by approximately 15% and NIC receipts drop by almost 18%.
“Given that the number of unemployed is expected to rise in the coming months, as people who are presently furloughed (and hence still subject to PAYE and NICs on their furloughed earnings), may in many cases get made redundant as the economic downturn caused by COVID-19 continues, one can realistically expect the Government’s PAYE and NIC receipts to continue to fall over the coming months.”
If you would like to discuss any of the above or have other queries about how you can make the right decisions for the future of your business and your income, please contact your usual Blick Rothenberg contact or one of the partners whose details are to the right.
You can also visit our Coronavirus – Practical Guidance for businesses today Hub for our latest updates and insights.