VAT Payments Suspended Until 30 June 2020
On 20 March, the new Chancellor, Rishi Sunak, announced a three month payment deferment lasting until 30 June 2020.
The tax holiday will be automatic although businesses may still go ahead and pay now if they wish. Taxpayers do not have to notify HMRC if they intend to take advantage of the payment holiday.
Any VAT due will be payable by the end of the 2020/21 financial year, which is 31 March 2021. This is the date for monthly VAT payers. However, the position is more complex for most VAT-registered businesses that are on quarterly staggers.
HMRC has yet to confirm their position. But the likely payments dates will be, depending on return due dates: 31 March 2021; 30 April 2021; or 31 May 2021.
There will be no interest or default surcharges due on deferred VAT. VAT credits and refund will be paid as normal during the period.
Importantly, VAT returns must still go in on time by the 7th of the relevant month.
HMRC has now postponed the launch of the new Making Tax Digital for VAT phase two, we are not entirely sure at this stage if that will result in the one-year soft-landing phase of MTD is extended until 2021, watch this space……….
Direct debit payers beware
HMRC will still automatically withdraw the VAT declared in the VAT return. HMRC are not able to stop this process. So any direct debit payer must contact their bank immediately to cancel the payment.
What happens after June?
Given the deepening economic gravity of the COVID-19 situation, it is entirely possible that there will be an extension in July to this VAT deferment. So direct debit payers should pause before reinstating their payments. And we should all keep tuned.
Full details of the deferral of VAT payments are here.