The Covid-19 pandemic has led to an abundance of events being cancelled or postponed to a future date. Sporting events, outdoor activities, concerts and business activities have been severely affected by this outbreak. If you or your business had to cancel any activities or are considering whether you should, the thought of how to ease such financial burden must be assessed.

One such financial burden is VAT. It is an important cost factor when considering cancelation of events, from both a cashflow and reporting perspective. VAT needs to be thoroughly reviewed to help minimise the negative effects of the current realities.

 

Should an event be cancelled or postponed the following questions must be carefully considered:

  • Can we reverse the VAT paid on a deposit?  
  • Is any additional payment of VAT required should an event be cancelled?
  • How do we account for the VAT of customers who ask for a refund?
  • What is the VAT implication for customers who do not show up to the event should it be postponed?
  • Can any VAT paid till said date of cancellation be recovered?
  • Does Insurance cover for both postponed and cancelled events? If so, to what extent will insurance cover for the VAT on customers who do not show up?
  • Is the VAT paid on cancelation or postponement charges recoverable?
  • What element of VAT should be paid or recovered if the event takes place through an online platform?
  • How should VAT in these circumstances be reported in the statutory VAT return?

 

How can we help?

Covid-19 has presented a different realties and challenges to individuals and businesses alike. We would be happy to discuss any VAT queries as outlined above, and even naturally any others that would be relevant to your industry.

Contact us today to determine the best way forward: 

Karen Spiteri Bailey - Partner  ([email protected])