VAT payment deferrals and COVID-19
On Friday 20 March the Chancellor announced that in a further bid to support businesses during the COVID-19 pandemic, the Government will allow businesses to defer from paying their VAT for 3 months.
What does this mean for your business?
We have put together the following FAQs to provide some of the practical detail surrounding this announcement.
Do I still have to pay VAT to HMRC?
Not if you don’t want to or cannot. HMRC is deferring VAT payments for 3 months.
Do I still have to file VAT returns?
Yes. The deferral scheme only applies to payment of VAT. You should continue to file VAT returns by your normal due date to avoid late filing penalties.
What if I am unable to file VAT returns on time because of Covid-19 affecting me, my staff or my accountant?
We expect such circumstances to count as a “reasonable excuse” for late filing. However, the timeframe for using COVID-19 as a reasonable excuse is the actual time of sickness and not the duration of the pandemic.
What payments can be deferred?
At the moment HMRC has said that payments due between 20 March 2020 to 30 June 2020 may be deferred.
When will I have to pay deferred VAT payments?
You will be given until the end of the 2020-21 tax year (5 April 2021) to pay any liabilities accrued during the deferral period.
Will there be interest or penalties if I defer payment?
No.
How do I know if I am eligible to defer VAT payments?
All UK businesses are eligible to defer.
Do I have to apply for deferral?
No – it applies automatically.
What if I am due a refund or reclaim of VAT?
VAT refunds and reclaims will be paid by HMRC as normal.
What if I am able to and want to pay VAT as normal?
You can continue to pay in the normal way.
