Coronavirus VAT deferment: Get the details right

You're wrong there, the article was published on Thursday but went out as a round-up for readers of our tax bulletin this morning.

The information about direct debit came through shortly before the item was first published and we've been picking up further snippets such as the MOSS users not being eligible since.

The situation with all of these measures is developing incrementally, so we thought it was a good idea to try and collect them in one simple reference source. Richard Asquith and the people at Avalara (not to mention HMRC) went out of their way to help put this material together to help the broader community, so it looks petty to snipe at them without much justification.

On behalf of AccountingWEB, I'd like to publicly thank them for their efforts and politely ask that people be a more understanding and less snarky at this time.

Appreciate you are doing your best John - we sent this information out to clients and shared via Any Answers on the morning of the 23rd, ie a week ago having had confirmation directly from HMRC that morning.
It just seems to me that Any Answers has become the only place to go on here now.

Yes, snarky, nice word, I apologise for that, I was being sarcastic but our clients and we ourselves are having to keep ahead of the game - I just feel it would have been nice for A Web to provide answers for us rather than 4 days after we have already posted the information on Any Answers. Sorry if that offends.

Would you mind elaborating why not take advantage of this deferral?

I was just wondering that myself. I can access some clients information but it won't be up to date because they have been furloughed. Other clients, I can't access anything at all so the March return won't be submitted.

I'm working on the basis that so long as something is submitted, we can correct any omissions at a later date. Obviously I wouldn't suddenly process a whole load of reclaim situations for clients who normally pay (unless they're legitimate) but if they can only manage to get some information to me then I would be prepared to file based on what they can get to me or even submit a nil return and correct in a later quarter on the basis of not being able to access the information.
I am asking clients as much as possible to email documents though so that we can access as much as possible remotely.

I would imagine the relevant return for your client is the February one, payment for which is due by 10 April, ie payment due between 20 March and 30 June.

I understood this to include the vat q/e 30.4.2020 but getting conflicting information. This link from ICAEW suggests 30/4/2020 and I assume they have more information than most.
https://www.icaew.com/insights/tax-news/2020/mar-2020/covid19-vat-and-se...

Didn't phrase my answer above properly, apologies.

1. This applies to VAT payments DUE from 20 March 2020 to 30 June 2020.
2. It applies to the deferral of one quarters VAT ONLY.
3. The deferral will include any ONE quarter’s VAT as follows:
a. Q/e 29.2.2020 – VAT due on 7 April 2020
b. Q/e 31.3.2020 – VAT due on 7 May 2020
c. Q/e 30.4.2020 -- VAT due on 7 June 2020.

Monthly VAT returns - similar to above dates.

That's it.

Thanks brumsub, I think that clear's it up perfectly.

This could though create another problem as struggling businesses might have to find funds after coming out of the crisis and a winter's trading.

That's helpful, although I am sure it will get extended unless there's a dramatic change in the situation. Useful to be able to explain more clearly to clients though.

I just got bitten on the bottom by this - I’m a lay person not an accountant but the way deferral advice was worded I assumed i could defer my 31st May return too. Had a letter from HMRC today saying I was late in paying. Thankfully it’s all sorted now and no penalties to pay but why do HMRC have to make things so confusing? It’s not the first time I have found their communications and advice to be misleading and obtuse.

Given HMRC's insistence that VAT returns MUST be submitted this falls under the coverall as essential business travel so the client can drop them off at an agreed point. If you're worried about exposure on the books then just leave them for 72 hours in a cool/cold place so they're safe.

At this point just downing tools and sitting at home for three months is unacceptable. If there's a safe way to carry out business we have to do so to support everyone concerned and not just leave it to others. We all need to use our initiative to keep safe and keep working whenever and wherever possible.

I speak as someone who is in the office because we run the finance for a care company and those care workers and especially those who they care for need us more than ever.

Hi Mark,
But the May quarter can be paid by 7 July therfore is this outside the deferment period or is the due date the 30th June and 7th July is an extension hung over from the intoduction of the online VAT filings?
Its not clear from the guidance.

KK

By regulation 40(2) of the Value Added Tax Regulations 1995 (SI 1995/2518) VAT in respect of a period to which a return relates (ie the quarter in most cases) is payable to HMRC not later than the last day on which the trader is required to make the return.

By regulation 25(1) ibid. a return is required to made to HMRC not later than the last day of the month next following the end of the return period, ie 30 June 2020 in the case of a quarter ended 31 May 2020.

30 June 2020 is therefore the date on which the VAT for the quarter is payable, but this is subject to the provisions of regulation 25A(20). This provides that additional time is allowed to make a return in two circumstances:

1. where payment related to the return is made electronically (whether or not the return is made electronically or on paper)

2. where the return is made electronically (so not paper) and no payment is required to be made.

But this additional time to make the return (and hence to pay) only applies where HMRC (or its predecessor) have so directed. The most recent copy of the directions I have provides:

“Additional time may be available for the return and payment to reach us if payment is made by an approved electronic method. To qualify:
• Payment by BACS, Bank Giro Credit Transfer or CHAPS must be in our bank account by the seventh calendar day after the standard due date.
• DD payments will not be collected for a further three working days after the extended due date for receipt of the VAT Online return. 

• [HMRC] must receive paper VAT returns by the date the payment is due. Electronic returns must be received by the seventh calendar day after the standard due date. 

These incentives apply only if there is a payment to be made of VAT declared on the VAT return. 

They do not apply to: 

• ‘nil’ or repayment returns 

• returns under the annual accounting scheme 

• returns made by businesses required to make payments on account.”

It is wholly unclear to me from the HMRC website which quarters they intended to be included in the deferral scheme. It would seem odd and unfair if those with February quarter ends got another quarter of deferral (the May quarter) while those with March and April quarter ends got only one. The reference in the direction to nil returns not qualifying suggests that it is HMRC’s view that a return which shows or should show an excess of output tax over input tax (if any) will qualify for additional time to make the return, because it is not a “nil” return) and so the May quarter end cases are not within the deferral scheme. But that of course is HMRC’s statement of the cases that will not qualify. It is not necessarily exhaustive as the direction must be construed to be consistent with the regulations.

Those with May quarter ends who wish to defer payment will find themselves in the odd position of having to argue that they are not entitled to the additional 7 days to make a return. I do not think that they can argue that no payment is “required” to be made (item 2. above), as regulation 40 requires a person to account for the VAT for which he is accountable and to pay it.

They might argue that where the payment of VAT has been deferred (eg by cancelling the direct debit and not making any other payment), no payment “is made”, so that they are not entitled to the additional time to make the return.

Anyone taking that view would be well advised to make their return by 30 June or they might get a surcharge liability notice or surcharge. What a judge of the FTT would make of the argument should HMRC issue a surcharge in July I would not like to say.

Thanks you Richard,
I agree that it would appear unjust for those who are about to submit a return might get another chance with their next return to 31 May 2020. I think HMRC could have made life easier if they'd specifically outlined which returns and payments qualify for deferment. Using the specific date of 30 June 2020 gives an impression that payments due by that date apply yet none do as the last one would appear to be payments up to 7 June 2020. Many traders still think that there is one month to submit and pay a return and they might then live in a false hope that they will have nothing to pay at the moment regarding the return to 31 May 2020.