All UK VAT registered businesses are eligible to defer payments due between 20 March 2020 and 30 June 2020. Business may, should they choose to, continue to pay as usual but have the option of delaying until March 2021.
VAT payments you can defer
These are the only payments a business can defer:
- 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
The deferral does not cover payments for VAT MOSS or import VAT.
Submitting your VAT return
There is no need to tell HMRC that you’re deferring your VAT payment. Those who make their payments by direct debit should contact their bank to cancel them in good time.
However, you still need to submit your return in time for your original date. Though the return is digital, there can often be paper invoices and records required to complete it. Some businesses may mistakenly assume that, as they are away from their offices, they are not expected to do this at the moment. But, whilst the scheme is automatic, HMRC still need to be made aware of the amount of VAT they are deferring.
Two weeks after a return’s due date, businesses will be given a central assessment which is effectively HMRC’s guess at their VAT bill. There is a danger here as if a central assessment puts your VAT liability lower than it would have been if you had filled out your return, then this can be classed as fraud.
VAT repayments and returns
During this period, HMRC will continue to process VAT reclaims and refunds as normal and most repayments are paid within 5 working days. These repayments will not be offset against any deferred VAT, but they will be offset against existing debts.
How deferring VAT affects payments on account
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.
You will still need to submit your VAT returns to HMRC on time.
After the VAT deferral ends
VAT payments that are due after the end of the deferral period will need to be paid as normal. Following the deferral period, businesses that are struggling to pay their VAT liabilities should contact HMRC to set up a time to pay arrangement.
For assistance on VAT, or any other issue triggered by Covid-19 that is affecting your business, please feel free to contact us at firstname.lastname@example.org