Although deferred VAT payments have been used by governments in Europe to alleviate the financial burden of companies in their own countries in trouble, the inconsistent approach to COVID-19 VAT relief creates a misleading picture, says Professional Services Director Andy Spencer .

VAT is probably one of the last things many people will think about in the current crisis. This is a transaction tax and for a large percentage of the population across the EU, purchases are increasingly limited to basic items such as food and medicine.

JHowever, many governments in Europe use VAT as a means of introducing liquidity to the economy and relief for companies affected by the crisis.

The UK government used VAT to introduce a £ 30 billion financial incentive for the British economy. It is clear that the deferral of all VAT payments due from 20 March 2020 to 30 June 2020 was seen as a quick way to introduce liquidity for businesses instead of waiting for grants to be granted or for banks to approve the loan.