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VAT payment deferrals to support businesses affected by the coronavirus

The government has announced that deferred VAT payments for the period between 20 March and 30 June 2020, which are now due on 31 March 2021, can now be paid in installments.

Businesses can use the New Payment Scheme to spread these payments over equal installments up to 3‌1‌‌ ‌‌March 2022. You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20 March and 30 June 2020 do not need to be paid in full until the end of March 2022.

Alternatively, they can make payments as normal by 3‌1‌‌ ‌‌March 2021 or make Time To Pay arrangements with HMRC if they need more tailored support.

The 3 month VAT payment deferral to help businesses with their cashflow during the coronavirus outbreak ended on 30 June 2020.

The deferral applied to all UK businesses for VAT payments due between 20 March 2020 to 30 June 2020. No applications were required for the deferrals and businesses did not need to make a VAT payment during this period. Any VAT return payments that are deferred will need to be paid by 31 March 2021.

Taxpayers will be given until the end of the 2020/2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal. No penalties or interest for late payment will be charged in the deferral period.

Claiming a refund

HMRC have confirmed that where taxpayers wanted to defer VAT payments, but did not manage to cancel their Direct Debit in time they can claim a refund. Taxpayers can submit a Direct Debit Indemnity Claim to their bank, ensuring that they state they want to claim a refund under the Direct Debit Indemnity Scheme (DDI). There is no time limit in making this request.

For help and advice with managing your business through the coronavirus outbreak, contact Ann Bibby on or 01295 250401.