VAT Payment Deferral – COVID-19

By hello@cornelaccountants.com Small Business No Comments on VAT Payment Deferral – COVID-19

Summary

VAT registered businesses are not required to make VAT payments that are due from 20 March 2020 to 30 June 2020.This relief is both automatic: it does not need to be claimed and it is optional: payment can still be made.Your VAT liability and payment is not cancelled, it is deferred. Any VAT liability will need to be settled by the end of the 2020/21 tax year.VAT refunds and reclaims are not affected.

VAT Payment deferral

Under the government’s emergency measures for business, announced on 20th March 2020, VAT registered business are not required to make VAT payments that are due from 20 March 2020 to 30 June 2020.This will apply to VAT payments due for the following VAT quarters:Q/E 29 February 2020: normal payment deadline 7 April.Q/E 31 March 2020: normal payment deadline 7 May.Q/E 30 April 2020: normal payment deadline 7 June.This is an automatic relief that does not need to be claimed.Your quarterly VAT payment is NOT cancelled, it will be deferred, and the VAT liability will need to be settled by the end of the 2020/21 tax year.

How do I defer this VAT payment?

If you wish to take up the deferral simply do not pay this quarter’s VAT bill. The VAT return will still need to be prepared and filed with HMRC in the usual way but payment can simply be held back until 31 December 2020. You are effectively receiving a loan by the government which is designed to assist your cashflow, the aim being that you can use the cash to tide you over the next few months.

Do I have to defer payment?

No. You do not have to defer payment. If you feel that your cash flow is stable, you are free to continue to make your VAT payment on time, at the end of your VAT quarter in the normal way.

Payment by Direct Debit – ACTION REQUIRED

If you currently pay your VAT by direct debit you must cancel the direct debit with your bank, if you wish to defer payment. HMRC say, “Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return”.

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