The Value Added Tax (Amendment) Regulations 2025, effective June 14th, 2025, amend the 1995 VAT Regulations to allow the Commissioners of His Majesty's Revenue and Customs to extend deadlines for final VAT returns.
This power applies to individuals ceasing VAT registration on or after June 14th, 2025, providing additional flexibility in specific circumstances.
Arguments For
Improved Flexibility for Businesses: The amendment provides flexibility to businesses facing difficulties in meeting the original deadline for filing final VAT returns.
Reduced Administrative Burden (potentially): By allowing extensions, HMRC may reduce the number of late filing penalties, simplifying administration for both businesses and the tax authority. This depends on the actual number of extensions granted.
Fairer Treatment of Businesses: This amendment ensures a fairer treatment of businesses facing exceptional circumstances that prevent timely filing of final VAT returns, preventing undue hardship.
Legal Basis in VAT Act 1994: The amendment is explicitly grounded in Section 25(1) of the Value Added Tax Act 1994, providing a clear legal justification.
Arguments Against
Potential for Abuse: The power to grant extensions could be abused by businesses intentionally delaying their filings.
Increased Administrative Burden (potentially): Assessing and processing extension requests adds to the workload of the tax authority, potentially impacting their efficiency. This depends on the number of extensions requested.
Uncertainty and Complexity: The amendment introduces an element of uncertainty regarding the timely submission of VAT returns, potentially affecting financial planning for both businesses and HMRC.
Lack of Transparency (potentially): The criteria for granting extensions aren't explicitly detailed, potentially leading to inconsistencies in application and a lack of transparency.
The Commissioners for His Majesty’s Revenue and Customs make these Regulations in exercise of the powers conferred by section 25(1) of the Value Added Tax Act 1994[1].
- Citation, commencement and effect (1) These Regulations may be cited as the Value Added Tax (Amendment) Regulations 2025 and come into force on 13th June 2025. (2) These Regulations have effect in relation to a person who, on or after 14th June 2025, ceases to be liable or entitled to be registered under the Value Added Tax Act 1994.
This section introduces the Value Added Tax (Amendment) Regulations 2025, citing the legal basis within the 1994 Value Added Tax Act.
It states the regulations' official name and effective date (June 13th, 2025), clarifying that they apply to individuals ceasing VAT registration from June 14th, 2025, onwards.
- Amendment of the Value Added Tax Regulations 1995 In regulation 25 (making of returns) of the Value Added Tax Regulations 1995[2], after paragraph (4) insert— “(4AA) Any period specified in paragraph (4) for the making of a final return may be extended by direction of the Commissioners whether or not that period has ended at the time the direction is made.”
This section details the specific amendment to regulation 25 of the 1995 Value Added Tax Regulations.
It adds a new paragraph (4AA), granting the Commissioners the authority to extend the timeframe for filing final VAT returns, even if the initial deadline has already passed.
Jonathan Athow Justin Holliday Two of the Commissioners for His Majesty's Revenue and Customs 13th May 2025
This section provides the signatures and roles of the Commissioners who approved the regulations, along with the date of their approval (May 13th, 2025).
Explanatory Note (This note is not part of the Regulations) These Regulations amend regulation 25 of the Value Added Tax Regulations 1995 to allow the Commissioners to extend the time required for a person to make their final return. They have effect in relation to a person who ceases to be liable or entitled to be registered for VAT under the Value Added Tax Act 1994 on or after 14th June 2025. A Tax Information and Impact Note covering this instrument will be published on the HMRC website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.
The explanatory note summarizes the regulations' purpose – extending the deadline for final VAT returns – and reiterates its effective date.
It also indicates that further information will be available on the HMRC website.
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