Thursday 19 March 2020 12:30 pm

Manufacturing industry calls for tax deferment as part of coronavirus package

The British manufacturing industry is calling for an immediate deferment of VAT, PAYE and National Insurance payments as part of a package of measures to tackle the impact of coronavirus.

As the prospect looms of thousands of skilled employees being laid off, industry group Make UK has called on the government to delay taxes as part of its coronavirus package.

Read more: European carmakers shutting plants as coronavirus hammers demand

Make UK said that while the measures announced by the Chancellor on Tuesday, which includes a business rates holiday for companies, were welcomed they will take some time to feed through into the system. It has suggested that measures that will have a more immediate impact will help employers’ cashflow.

It is looking to defer VAT, PAYE and NI contributions for three months initially, and renew as needed to ease cashflow challenges. It has also called on the Chancellor to extend the statutory sick pay support, increasing reimbursement from two weeks eligible per employee to a longer period.

Chief executive of Make UK, Stephen Phipson, said: “There are alarm bells going off right across the manufacturing sector with the prospect of substantial lay-offs looming. Order books are collapsing and this is creating immediate cashflow issues for companies which need addressing within days not weeks.”

“The measures already announced by the Chancellor are welcome but, events are so fast moving that we need to go further. As such, we need urgent measures which will have an immediate impact on the ability of companies to stay afloat during this crisis and retain their staff.”

A Treasury spokesperson said: “The Chancellor has made clear his determination to do everything we can to keep this country, and our people, healthy and financially secure.”

“That includes ensuring that businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs.”

“We have set out a comprehensive, coordinated and coherent response to what is a serious and evolving economic situation, and will outline the next stage of our response in the coming days.”

On Monday, Make UK published its first quarter manufacturing outlook survey which outlined the extent of the industry’s distress even before the impact of coronavirus had hit business. Export orders had slumped and turned negative for the first time in three years, while domestic orders had their worst run since 2015.

The manufacturing industry has suffered a prolonged downturn and uncertainty. The US-China trade war last year, paired with the Brexit impasse, was a cloud over the industry’s head.

Read more: UK PMI: Manufacturing output jumps but coronavirus looms

Britain’s manufacturing sector grew at its fastest rate in 10 months last month, but data firm IHS Market warned that the coronavirus outbreak would lead to “sizeable raw material delivery delays, rising input costs and increased pressure on stocks of purchases”.

Earlier this week, car makers across Europe announced plans to shut plants and slow production. PSA, which owns Peugeot, has taken the decision to shut plants until 27 March, including its Vauxhall plant at Ellesmere Port and Luton in the UK.

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