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HMRC collected a record £157.2bn from VAT bills in 2021-22, a 55% increase on the £101bn collected in 2020-21.
VAT received has risen sharply after the rate of VAT paid by the hospitality sector reverted to 20% on 1 April 2022, after it was temporarily reduced to 5% and then 12.5% during the pandemic, says UHY Hacker Young. In addition, the government introduced a VAT holiday between March and June 2020 to support businesses hit hard in the early stages of the pandemic. After that, many businesses were able to defer their VAT payments into smaller instalments until March 2022.
Sean Glancy, partner at UHY Hacker Young, said: ‘For all the good the VAT holiday did at the time it was introduced, it has resulted in businesses paying the most VAT in recorded history the year after.’
