Updated: 19 June 2020
Following the Chancellor’s statement on 20 March 2020, HMRC have now issued their guidance regarding the deferment of VAT payments in response to the coronavirus pandemic.
The deferral for VAT payments will apply from 20 March 2020 until 30 June 2020.
No application is required to be made to HMRC. VAT returns should continue to be prepared, filed and submitted as normal.
If you file VAT returns on a quarterly VAT stagger, ending February 2020, your VAT return is still due to be filed by 7 April 2020, however your payment is optionally deferred.
If you file VAT returns on a quarterly stagger ending March 2020, your VAT return is still due to be filed by 7 May 2020, however your payment is optionally deferred.
If you file VAT returns on a quarterly stagger ending April 2020, your VAT return is still due to be filed by 7 June 2020, however your payment is optionally deferred.
If you file VAT returns on a monthly basis, then your February 2020, March 2020 and April 2020 VAT returns should be filed as normal, however payments for these returns are deferred.
VAT periods ending May 2020 are filed as normal, the VAT return is filed as normal and payment for it is due, as normal, by 7 July 2020.
The above does not apply if you are a Payments on Account Trader and you must file your returns by the normal due dates, but the payments due before 30 June 2020 are deferred. The payment due on 30 June 2020 should be made on time.
All UK businesses are eligible for the deferment. We understand from the communication we have received from HMRC that payment of VAT due in the deferred period will need to be made by 5 April 2021.
VAT repayment returns will be processed and paid as normal by HMRC.
HMRC’s issued guidance remains silent on interest due on deferred payments, whereas with other tax payment deferments it refers to either not, or charging interest.
On the basis it is silent, we assume an interest rate of 3% will be applied to the payments deferred.
The VAT payment deferral period will end on 30 June 2020. HMRC have now updated their guidance here.
If you have taken advantage of the VAT payment holiday, you will need to reinstate your direct debits for payments due after 1 July (or use an alternative payment method).
VAT payments that are due after the end of the deferral period will need to be paid as normal.
As a result of the above, we currently assume that deferral of VAT payments will not be extended.