Share this content
21

Deferral of VAT, Coronavirus announcement

Putting together some expected FAQ

Didn't find your answer?

I just know come Monday, i've going to have questions pitched at me like,

  1. Will i still have to submit on time
  2. If i am late submitting will the normal surcharges regulations apply
  3. I get refunds, will they still come at the expected time (like normal)
  4. I pay by direct debit, do i cancel it and have to reset it up again after?
  5. I want i pay my VAT can i still do that.

My Guess is 

  1. Yes, unless there is good reason
  2. Yes, unless there is a reason in relation to situation (likely to be quite easy to argue for some)
  3. Yes (fingers crossed, although might be slightly slow than normal)
  4. Hopefully not
  5. Yes if you want, just pay to HMRC bank with VAT number as reference like normal

 

Anyone have any other thoughts or pre-empited FAQs?

Replies (21)

Please login or register to join the discussion.

boxfile
By spilly
20th Mar 2020 22:06

Ooh, nice idea. Might do a pre-emptive email to try and head off some of the more basic queries.

Thanks (3)
By Charlie Carne
21st Mar 2020 01:09

These are exactly the questions on my mind today following the chancellor's announcement. I am hoping that more detail will be announced over the weekend, or Monday at the latest. All we've had so far from the official "COVID-19: support for businesses" is that:
"This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 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."
- This answers question 3, but not the critical questions 1, 2 and 4.

The ICAEW Covid-19 support page says:
"The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period. The deferral applies automatically and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal."

Thanks (2)
Replying to charliecarne:
blue sheep
By NH
21st Mar 2020 06:51

I think pretty much a copy/paste email of that ICAEW page to clients will do the trick for now

Thanks (0)
Replying to NH:
By Charlie Carne
21st Mar 2020 11:46

Not quite, as we need to know before 7th April whether we need to either cancel the direct debit or not file the February quarter VAT return.

Thanks (1)
ALISK
By atleastisoundknowledgable...
21st Mar 2020 06:14

My quarterly returns are March & June. Does this mean that I don’t make my 07/05 payment NOR my 07/09 payment (liability accumulated?)

Thanks (0)
Replying to atleastisoundknowledgable...:
avatar
By norstar
24th Mar 2020 14:23

I don't think so. The dates presented mean that Feb, March and April returns are covered by the payment holiday, which makes sense as it will cover everyone's VAT stagger and everyone benefits for one quarter only.

Thanks (1)
Jack-O-Lantern
By TeYoo
21st Mar 2020 08:41

"Will I still have to submit on time" - if a business' staff are sick or self-isolating, particularly in a small firm where it may just be the one person who does the accounts, this might be problematic to achieve ...

And if you do submit, how do you stop the automatic direct debit payment, if payment is not mandatory now ?

Thanks (3)
avatar
By ChrisKM
21st Mar 2020 11:03

atleastisoundknowledgable... wrote:

My quarterly returns are March & June. Does this mean that I don’t make my 07/05 payment NOR my 07/09 payment (liability accumulated?)

I am slightly confused (not hard) about the wording of the following:

Quote:
The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.

I read that to mean VAT liabilities that fall due between 20 March 20 and 30 June 20 can be deferred until the end of 2020-21.

Does that mean that VAT liabilites for May 20 quarters and beyond will have still have to be paid on time (because they fall due after 30 June 2020); is that correct?

Thanks (0)
Replying to ChrisKM:
avatar
By AthollAccounts
21st Mar 2020 15:13

I've been wondering the same. If it is on payment due dates it would have been far clearer if they'd just said 7 June

Thanks (0)
Replying to ChrisKM:
avatar
By norstar
24th Mar 2020 14:23

I don't think so. The dates presented mean that Feb, March and April returns are covered by the payment holiday, which makes sense as it will cover everyone's VAT stagger and everyone benefits for one quarter only.

Thanks (0)
avatar
By rmillaree
21st Mar 2020 11:52

One minor item of note that i noticed yesterday - is that the ability to setup vat direct debits for MTD clients seems to have been restored to the old agent gateway. whoooooooooooooohooooooooooooooooo

I haven't tried setting one up yet to see if it works though- so it may look like its there to tease. Note this also gives us the baility to check if the direct debit is in place again. Pretty good timing by hmrc for once if it works.

Thanks (1)
avatar
By AthollAccounts
21st Mar 2020 15:11

The little bits of guidance available state that refunds and reclaims will be issued as normal.

Agree re DDs. Will cause so much hassle if they have to be cancelled as many banks struggle to set up a DD to details where one has been cancelled previously.

I would advise everyone against paying even if they have plenty cash reserves and to transfer to savings instead. If this goes on longer than expected they may need that cash and gives more options.

I'm making notes on everything announced and sending out to clients tomorrow. Unfortunately quite a bit of detail still to be announced, especially on some of the schemes administered by Scottish Govt

Thanks (0)
avatar
By Jason Croke
23rd Mar 2020 08:21

Some clarity would be useful, in my (logical) mind, direct debits would need to be cancelled as HMRC will not know whether a taxpayer can or cannot afford to pay the VAT.

It might be that HMRC are simply going to not collect VAT from anyone, so a taxpayer who actually wants to pay will not be able to because their direct debit will not be collected upon. The wording in the HMRC guidance is ambiguous.

It would also be logical that the deferment is from 20th March and so VAT returns due 7th April are included in the deferral. It would make no sense for business to have to pay over what they've already collected last quarter but get a deferral for next quarter when their businesses will be closed/reduced operation.

Hopefully some clarity will be published later today and we can update this thread accordingly.

Thanks (0)
avatar
By dbarclay81
23rd Mar 2020 08:56

My reading is that any VAT payments due to be paid to HMRC during the deferral period are not required to be paid - and so I believe this will include Payments on Account. Any thoughts?

Thanks (0)
avatar
By DonDan
23rd Mar 2020 09:06

I called up the vat helpline this morning to ask about the direct debit question. The advice was for clients to cancel their existing direct debits and set them up again when this settles down.

I don't know whether this is formal official advice or just what the guy who answered the phone is telling people

Thanks (0)
avatar
By FayeBK
23rd Mar 2020 09:07

My main question at the moment is going to when exactly will the deferred payment need to be made in the future... the guidance says "Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated" but do they mean a 5th April tax year for everyone? Or in the case of a Limited Company with a year end of 31st December (for example) do they mean they will have until 31st December to pay?

Thanks (0)
Replying to FayeBK:
avatar
By aland
23rd Mar 2020 11:21

This is VAT. I don't think they can mean a Corporation Tax year. That would be too complicated, so 5th April (or 31st March?)

Thanks (0)
blue sheep
By NH
23rd Mar 2020 09:32

I have just web chatted to HMRC regarding this - I hope this clarifies it for everyone
1. If you have a VAT payment due between 20 March and end June, you have the option to defer that payment until a later date.
The payment must be made before 31 March 2021.
2.There will be no interest charged on any deferred VAT payment, and you do
not need to tell HMRC if you are deferring a payment during this time.
3.As the DD normally automatically takes payment, HMRC currently advise to
cancel it just to be safe.

Thanks (3)
Replying to NH:
avatar
By MrDSGrace
23rd Mar 2020 10:31

What about the requirement to file the return on time? Is this deferred or do we still need to make sure returns are filed?

Thanks (0)
avatar
By Colum
23rd Mar 2020 16:40

I struggle to understand that this is a sensible measure. If a company cannot pay its VAT how can it expect trade out of it by next March?

If the business suffers there will be reduced turnover and VAT anyway from which to pay a new liability.

They seem to be saying – pay the wages out of your VAT money while the business is closed because of the virus, and later sort it out with the liquidator in a years time.

Thanks (0)
Replying to Colum:
avatar
By Jason Croke
24th Mar 2020 08:43

There remains a risk that deferred VAT is never paid because the business has gone under by the time it becomes payable in March 2021, but that is a constant risk for HMRC where all taxpayers collect VAT and potentially go under or do a runner before paying it to HMRC.

In a sense, yes, government are saying you've collected some VAT which will be better redirected to pay your employees this quarter - but this is VAT already collected last quarter (Dec, Jan, Feb) and with the business rates break and government paying upto 80% of employees salaries, it is all combined to protect business. Going forwards, turnover will be lower and the benefits of a VAT break will reduce as the lockdown goes on for longer.

These are unprecedented times, businesses are going to go under anyway, government just trying to limit the damage of the virus on people and damage caused to the economy.

Thanks (0)
Share this content

Related posts