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COVID-19 Information Hub

Coronavirus – Support For Businesses Through Deferring VAT

On 24 September 2020, the Chancellor announced updates to the VAT payment deferral scheme.

Updated 24/09/20

LATEST NEWS 24/09/20 :

A ‘New Payment Scheme’ for VAT deferral will offer businesses that deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021/22 in 11 equal instalments. All businesses that took advantage of the VAT deferral are eligible and can use the scheme. However, they will need to opt in using a process HMRC will launch in “early 2021”.

Government guidance:

HMRC will support businesses by deferring Valued Added Tax (VAT) payments for three months.

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

Eligibility

All UK businesses are eligible.

How to access the scheme

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

  • defer the payment until a later date
  • pay the VAT due as normal

It does not cover payments for VAT MOSS or import VAT.

HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.

You will still need to submit your VAT returns to HMRC on time.

HMRC will continue to process VAT reclaims and refunds as normal during this time.

If you choose to defer paying your VAT

If you choose to defer your VAT payment as a result of coronavirus (COVID-19), you must pay the VAT due on or before 31 March 2021.

You do not need to tell HMRC that you are deferring your VAT payment.

Payments made by Direct Debit

If you normally pay by Direct Debit you should contact your bank to cancel your Direct Debit as soon as you can, or you can cancel online if you’re registered for online banking.

After the VAT deferral ends

VAT payments due following the end of the deferral period will have to be paid as normal. Further information about how to repay the VAT you’ve deferred will be available soon.

Kirk Rice commentary:

As stated by the government this is a deferral scheme which is designed to support the cash flow of a business during the crises. The VAT will eventually have to be paid and will be due by 31 March 2021.

It is important to note that this is a VAT payment deferral scheme and businesses are still required to file their VAT returns in the normal way.

We’ll be updating this page for the answers as and when they become available, so please, do check back regularly for further information.

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