UK and International Tax news

Deferral of VAT Payments

Monday 30th March 2020

Following the Chancellor’s announcement last week, HMRC has issued further details on the temporary changes to VAT payments which otherwise fall due between 20 March 2020 and 30 June 2020.

This will generally mean the deferral of one quarter’s VAT, including VAT payments due on 7 April, 7 May or 7 June 2020 and the monthly payments due on each of these dates. HMRC has also confirmed that the deferral may apply to payments on account. These are normally due on the last day of the second and third months in any VAT quarter for affected businesses. Payments on account that are due to be paid on 31 March, 30 April, 31 May and 30 June can be deferred.

VAT registered businesses will have the option to defer the payments up to 31 March 2021 or pay the VAT due as normal.  Whilst HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement, VAT returns will still need to be submitted to HMRC on time.

Businesses will not need to tell HMRC that they are deferring payment and HMRC will continue to process VAT reclaims and refunds as normal during this time.

For businesses which normally pay their VAT to HMRC by direct debit, they should contact their bank to cancel the direct debit as soon as possible, or cancel online if registered for online banking, as otherwise HMRC will process direct debits as normal.

The deferral for VAT payments will be available to all UK business but it does not apply to VAT MOSS payments.

VAT payments due following the end of the deferral period will have to be paid as normal. HMRC will provide further information about how to repay VAT deferred in due course.

If you would like more information on the above, please contact Keith Rushen on 0207 486 2378.


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