As a result of COVID-19, deferral of VAT payments is now an option after The Chancellor of the Exchequer announced temporary changes to VAT payments due between 20 March 2020 and 30 June 2020. It is hoped that this will help businesses manage their cash flow.
What this means in practice is that all UK VAT registered businesses with a VAT payment due between the 20th of March 2020 and the 30th of June 2020 have the option to either:
1. Defer VAT payments (pay your VAT at a later date), or
2. Pay the VAT due as normal
But this does exclude VAT MOSS payments
You must still submit your VAT return on time
Please note that this deferral only applies to the payment due and not the actual return. All VAT returns will be due as normal by the deadline applicable to your business.
You don’t have to tell HMRC If you choose to defer your VAT payment but you will have to pay the VAT due on or before the 31st March 2021.
One important thing you should do however is cancel your Direct Debit to HMRC if you normally pay your VAT bill in this way, and I have already done this for my clients. It is quite straightforward to do this online through your Government Gateway account but please get in touch if you need help with this. I’ve also asked my clients to check with their bank to confirm that the Direct Debit has indeed been cancelled with them. If you don’t cancel the Direct Debit HMRC will take the payment. The last thing you need is the payment leaving your bank when you’ve already built the non-payment into your cashflow.
HMRC will continue to process VAT reclaims and refunds as normal during this time.
To find out more about see the Government guidance at COVID-19 Deferral of VAT payments