Government statistics show that more is paid out in VAT
For the first time in history the government had paid out more in VAT than it collects, say tax and advisory firm Blick Rothenberg
Alan Pearce, a partner at the firm 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.”
He added: “ Therefore, similar shortfalls in the government’s VAT receipts must be expects 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.”
Sean Randall, a partner at the firm said: “ The statistics released today shows 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.”
He added: “ 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.”
Robert Salter, a client services director with the firm said: “The lockdown and the resulting rise in joblessness has, as expected, created a significant fall in the government’s tax and 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%.”
He added: “ 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.”
