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VAT and coronavirus grants

Q: My client is receiving business loans and grants from the government under the Covid-19 business support measures. Are these receipts subject to VAT?

A: No. This income does not represent a payment for a supply of goods or services by your client to another party. These payments are purely to support and / or compensate your client (or its employees) during this period and as such are outside the scope of VAT; this income should not appear on the client's VAT return at all.