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Deferring VAT payments

Deferring VAT payments

What is it?

HMRC will support all UK VAT registered businesses by deferring Valued Added Tax (VAT) payments for 3 months.

How does it work?

The deferral will apply from 20 March 2020 until 30 June 2020, this also includes payments on account due be made between those dates. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period for any amounts that fall due within the deferral period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Deferred VAT payments will be due to be repaid by the end of March 2021.

Payments that fall due after 30th June should be paid on time as normal.

If you defer a payment on account between 20 March 2020 and 30 June 2020 but the balancing payment is outside of these dates, the amount you must pay is the balancing payment less any deferred payments. Deferring payments will not create a repayment.

HMRC have also announced a delay regarding the timescales for a business to have digital links in place for MTD purposes. This has been delayed until the first return on or after 1 April 2021.

What don't we know yet?

Once we have more information we will update this section.

Who is it for?

All UK VAT Registered businesses (VAT relief).

You can defer the following VAT payments:

  • quarterly and monthly VAT returns’ payments for the periods ending in February, March and April
  • payments on account due between 20 March 2020 and 30 June 2020
  • annual accounting advance payments due between 20 March 2020 and 30 June 2020

Please note, the deferral does not include VAT MOSS payments or payments of Import VAT (when bringing goods into the UK that are subject to VAT from outside of the EU).

What should I do next?

Wait for further details to be released.

If you are a business or individual that has a direct debit set up with HMRC, for your VAT payments, you need to cancel your direct debit with your bank to ensure money is not debited from your account.

Payments due in July 2020 onwards
Businesses need to take steps to reinstate their direct debit mandates so that they are in place in time for payments due in July 2020 onwards.

Any outstanding returns should be filed and three working days should be allowed to elapse before reinstating the direct debit mandate.

Agents cannot set up direct debit mandates on behalf of clients; the business needs to set up the mandate through their business tax account.

HMRC has confirmed to the Tax Faculty that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary systems change to avoid this happening for businesses in MTD for VAT.

Arrangements will also need to be made to pay the deferred VAT by 31 March 2021; further guidance is awaited from HMRC on this.

Critchleys Clients: If you have specific questions, please contact your Critchleys Accountant directly.

 


Published 24 March 2020
Last Updated 17 Junel 2020

17 June 2020
Payments due in July 2020 onwards

Businesses need to take steps to reinstate their direct debit mandates so that they are in place in time for payments due in July 2020 onwards.

Any outstanding returns should be filed and three working days should be allowed to elapse before reinstating the direct debit mandate.

Agents cannot set up direct debit mandates on behalf of clients; the business needs to set up the mandate through their business tax account.

HMRC has confirmed to the Tax Faculty that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary systems change to avoid this happening for businesses in MTD for VAT.

Arrangements will also need to be made to pay the deferred VAT by 31 March 2021; further guidance is awaited from HMRC on this.

28 April 2020
How does it work?
If you defer a payment on account between 20 March 2020 and 30 June 2020 but the balancing payment is outside of these dates, the amount you must pay is the balancing payment less any deferred payments. Deferring payments will not create a repayment.

Who is it for?
You can defer the following VAT payments:

  • quarterly and monthly VAT returns’ payments for the periods ending in February, March and April
  • payments on account due between 20 March 2020 and 30 June 2020
  • annual accounting advance payments due between 20 March 2020 and 30 June 2020

15 April 2020
HMRC have also announced a delay regarding the timescales for a business to have digital links in place for MTD purposes. This has been delayed until the first return on or after 1 April 2021.

3 April 2020
Please note, the deferral does not include VAT MOSS payments or payments of Import VAT (when bringing goods into the UK that are subject to VAT from outside of the EU).

31 March 2020
The deferral will apply from 20 March 2020 until 30 June 2020, this also includes payments on account due be made between those dates.

30 March 2020
Payments that fall due after 30th June should be paid on time as normal

27 March 2020

  1. Deferred VAT payments will be due to be repaid by the end of March 2021
  2. Please note, the deferral does not include VAT MOSS payments.

25 March 2020

  1. Cancel your direct debit to HMRC with your bank to ensure money is not debited from your account. This is relevant for VAT and the income tax deferral.
  2. What don't we know yet? It is stated that all UK businesses are eligible for the deferral. It does not state exactly what is meant by UK businesses.

24 March 2020
First published.

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