Q&As

Coronavirus (COVID-19)—what are the potential VAT consequences of cancelling or aborting contracts due to coronavirus?

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Produced in partnership with Bryn Reynolds of Simmons & Simmons and Jo Crookshank of Simmons & Simmons
Published on LexisPSL on 03/04/2020

The following Tax Q&A produced in partnership with Bryn Reynolds of Simmons & Simmons and Jo Crookshank of Simmons & Simmons provides comprehensive and up to date legal information covering:

  • Coronavirus (COVID-19)—what are the potential VAT consequences of cancelling or aborting contracts due to coronavirus?

Government recommendations on social distancing, self-isolation in the case of sickness, and business closures has resulted in many typical business and social activities being postponed or cancelled altogether by both customers and suppliers.

Where a contract is cancelled, any supplies from a VAT perspective will no longer take place, requiring (depending on the terms of the particular contract) a refund of any payments and the cancellation of invoices or credit notes as appropriate. For more information on how a taxable person who has accounted for and paid VAT on a supply, but who is not ultimately paid for that supply, may claim a refund of the whole or part of the VAT they have already accounted for, see Practice Note: VAT bad debt relief.

Where payment for an anti

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