Information from LSGA Solicitors, a BMRA service member

This article was submitted by Monty Jivraj of LSGA Solicitors, a BMRA service member
 
Please find a short summary on VAT deferrals for UK VAT registered businesses:

  •  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 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. 
Guidance link from HMRC  
 
VAT
 
The deferral for VAT payments applies from 20 March 2020 until 30 June 2020. All UK business are eligible but the deferral does not apply to VAT MOSS payments.
 
This will generally mean the deferral of one quarter’s VAT: the payment due on 7 April, 7 May or 7 June 2020 or the monthly payments due on each of these dates. HMRC has confirmed that the deferral also applies to payments on account. These are normally due on the last day of the second and third months in any VAT quarter for affected businesses. Consequently, payments on account that are due to be paid on 31 March, 30 April, 31 May and 30 June can be deferred.
 
HMRC has confirmed that businesses will need to cancel their direct debits. Businesses that have a direct debit mandate in place to pay their VAT and wish to defer payment will need to contact their bank to cancel that mandate. This needs to be done before the direct debit is due to be collected. Businesses will also need to remember to reinstate their direct debit mandate once the deferral is over. Agents cannot set up direct debit mandates on behalf of taxpayers.
 
Taxpayers have until 31 March 2021 to pay any liabilities that accumulate during the deferral period and will need to make arrangements to pay this accumulated VAT.
 
VAT refunds and reclaims will be paid by HMRC as normal.
 
Businesses should continue to file their VAT returns by the due date.
 
If you require any further assistance please contact Monty via the details below.

The Author: 
Monty Jivraj, Head of Business Tax, LSGA Solicitors
T:     020 7851 0100
E:     [email protected]