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VAT payment deferrals to support businesses affected by the coronavirus

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

Businesses will need to reinstate their direct debit mandates so that they are in place in time for payments due from July 2020 onwards. Direct debits usually need to be set up three working days before a VAT return is filed to be effective.

The deferral applied to all UK businesses for VAT payments due between 20 March 2020 to 30 June 2020. No applications are required for the deferrals and businesses will 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. Businesses must cancel their Direct Debits for the period until the end of June 2020, otherwise HMRC will continue to take the payment.

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 abibby@ellacotts.co.uk or 01295 250401.