COVID-19: VAT payment deferral measures - Updated: 28 September 2020

  • At a glance

    What's new

     

    Winter Economy plan

     

    On 24 September 2020, Chancellor Rishi Sunak announced a package of new measures to support the economy during the Coronavirus pandemic including reduced VAT rates and additional time to pay deferred taxes.

     

    • Businesses who deferred VAT payments which were due between 20 March 2020 and 30 June 2020 to 31 March 2021 will now be able to pay these in eleven interest-free instalments. This will be an opt-in scheme. More details of how to opt-in will follow in due course.
    • The temporary VAT cut, to 5%, for the hospitality and tourism sectors, was due to end on 12 January 2021 but has been extended to 31 March 2021. See Summer Economic Update 2020: Temporary VAT cuts

     

    Summer Economic update

     

    VAT registered business are not required to make VAT payments that are due from 20 March 2020 to 30 June 2020.

     

    This relief is automatic: it does not need to be claimed.

     

    Your VAT liability and payment is not cancelled, it is deferred. Any VAT liability will need to be settled by 31 March 2021.

     

    VAT refunds and reclaims are not affected.

     

    This deferral measure will apply to VAT payments due for the VAT quarters:

     

    • 29 February 2020: normal payment deadline 7 April.
    • 31 March 2020: normal payment deadline 7 May.
    • 30 April 2020: normal payment deadline 7 June.

     

    Direct debits

     

    If you pay your VAT by direct debit you must cancel the direct debit with your bank, if you wish to defer payment.

     

    HMRC say, "Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return".

     

    The Institute of Chartered Accountants in England and Wales (ICAEW) has made a request to HMRC to ask whether it can automatically stop collection of VAT by direct debit. It would appear from the statement above that HMRC are unable to do this.

     

     

    Source: HMRC COVID-19 support for business

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