Professor Peter Urwin, Professor of Applied Economics on the Economic Policy and Analysis MSc course, was interviewed on BBC Radio London about how tax payments are working for businesses during the Coronavirus crisis.
Due to the current situation around the coronavirus, many businesses are going into administration. The government have announced measures to help businesses, regardless of size, to stay afloat by deferring their tax payments until next year.
Professor Urwin said: “I think a lot of the measures that the government have taken are aimed at relieving pressure at this particular point, so we were kind of talking about the loan scheme but for instance, lots of companies were due to pay VAT at the moment and that’s now been delayed and deferred until March next year. So, all that money that companies were going to pay out to HMRC and VAT that they’d collected, they can now use that between now and next March to pay things.
“The problem is that they still have to pay it back. So, during the next few months it’ll help to keep the business running and so on and so forth, but then they’re still going to have to pay it back at the end of next March. Hopefully, things will return to normal and they’ll start making money but then they’ll start getting more VAT liabilities so it’s a bit of ‘kicking the can’ really.”