Coronavirus VAT Deferment
Support For Businesses By Deferring VAT Payments
Temporary changes to VAT payments due between the 20th of March 2020 and the 30th of June 2020 are now in place.
Update – The scheme which allowed for VAT payments falling due between 20 March 2020 and 30 June 2020 to be deferred until 31 March 2021 is to be extended to March 2022.
You can find out more in our blog here.
To help businesses affected by the coronavirus a three-month VAT payment deferment was announced on the 20th March 2020. This means that over two million businesses can defer any VAT payments which were due to be paid between the 20th of March and 30th of June 2020.
There will be no interest or default surcharges due on deferred VAT and any payments which are deferred must be paid on or before 31 March 2021.
All VAT credits and refunds will be paid as normal during the period.
The deferral also applies to annual accounting advanced payments and payments on account, normally due on the last day of the second and third months in any VAT quarter for affected businesses. Consequently, payments on accounts that are due to be paid 31st March, 30th April, 31st May and 30th June can be deferred.
There is also help available to business whom are unable to pay their VAT from previous periods due to COVID-19. HMRC’s Time To Pay system has been enhanced and a dedicated helpline is available.
If you cannot pay your tax bill because of coronavirus then contact the HMRC coronavirus helpline on 0800 024 1222 as soon as possible.
Who Is Eligible?
Almost all UK businesses that pay VAT are eligible for the scheme. This includes foreign businesses with a UK VAT registration.
However, any businesses filing for B2C electronic services sales or using mini one-stop-shop returns (MOSS) are not included in the scheme. They will have to pay the VAT due as normal.
How To Access The Scheme
The VAT tax holiday will be automatic and taxpayers do not have to notify HMRC if they intend to take advantage of the payment deferment scheme. However, despite payments being deferred, VAT returns must still be submitted as normal on the date which they are due.
Direct Debit Payments
Despite the deferment scheme being automatic, businesses whom currently pay their VAT via direct debit must take action now.
HMRC have advised that they are unable to stop existing direct debit payments from going ahead.
Businesses must take immediate action and contact their banks to cancel the facility or can cancel it via on line banking if registered, otherwise the VAT will automatically be withdrawn.
MTD For VAT
HMRC has now postponed phase two of Making Tax Digital for VAT. This means that the new rules on maintaining digital links from original transaction to tax return will not be enforced until 1 April 2021. Businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.
However, the regular VAT penalty regime for missing any Making Tax Digital obligations will still come into play on the 1st of April 2020 when the one-year soft-landing phase of MTD ended.
Information updated 01.12.2020