Editor in Chief (interim) AccountingWEB
Share this content

HMRC answers VAT payment deferral questions

Responding to a set of questions raised by AccountingWEB members, HMRC emphasised that the VAT payment deferral will operate automatically, but those who pay by direct debit will need to temporarily cancel their mandates.

26th Mar 2020
Editor in Chief (interim) AccountingWEB
Share this content
HMRC
iStock_KelvinJay

While businesses will not have to apply for the deferral announced last Friday, AccountingWEB member Bill_H was worried that organisations which usually pay their VAT liabilities by direct debit will need to cancel their mandate with their bank if they are not able to pay, HMRC advised. “Please do this in sufficient time.”

The coronavirus deferral will apply to all VAT payments due between 20 March and 30 June, with an option to defer payments up until 31 March 2021. Annual payments and payments on account due between 20 March and end June can also be deferred.

Interest will not be due if the payment has been deferred as a result of this announcement, HMRC said: “HMRC will be inhibiting all default surcharges and interest will not be accrued on amounts deferred as a result of this announcement.”

In answer to a question about penalties, HMRC said that while surcharges would be “inhibited” during the deferral period, “Businesses need to continue to render their VAT return on time.”

HMRC will be publishing further guidance on the announcement in due course. For any further updates, keep an eye on the Businesssupport.gov.uk VAT Deferral page.

What about corporation tax?

AccountingWEB members have also been speculating during the past week whether the government would extend the tax payment deferrals to corporation tax. In answer to these queries, HMRC replied: “CT payments must be paid in line with existing rules. For businesses who are struggling to pay their tax bill on time, HMRC is also delivering an enhanced Time to Pay offer to fit the specific impacts of COVID-19.

“Time to Pay is available to all businesses and individuals who are in temporary financial distress as a result of COVID-19 and are unable to pay their tax on time or have existing liabilities. HMRC has set up a dedicated helpline to enable those eligible to get practical help and advice which can be reached by calling 0800 0159 559.”

Replies (6)

Please login or register to join the discussion.

Jack-O-Lantern
By TeYoo
26th Mar 2020 23:57

"In answer to a question about penalties, HMRC said that while surcharges would be “inhibited” during the deferral period, “Businesses need to continue to render their VAT return on time.”"

As I said on another thread ...
Re "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, how exactly are they meant to calculate the VAT in order to submit/file ??

Anyway, surcharges are only on late payments - which this deferral of course means they aren't any now. There are no surcharges on late submissions (just a 'default' recorded).

Seems like some jobsworth in the HMRC is stamping their little foot to let every know they exist. Maybe the Secord Lord of the Treasury should have a word telling them who's in charge and what the whole point of this is ...

Thanks (0)
Northumberland flag
By MJShone
27th Mar 2020 08:40

Those businesses that make payments on account of VAT will get deferral on 4 payments (31 March, 30 April, 29 May and 30 June), while others will only get deferral on 3 (7 April, 7 May and 7 June). What am I missing?

Thanks (0)
Replying to MJShone:
avatar
By AnnAccountant
27th Mar 2020 09:36

Whatever you give, there is always someone who:

a) wants more;
b) wants a load of complex rules

Thanks (1)
Replying to AnnAccountant:
Northumberland flag
By MJShone
27th Mar 2020 09:46

So you don't think I'm missing anything?

Thanks (0)
John Stokdyk, AccountingWEB head of insight
By John Stokdyk
27th Mar 2020 10:43

Can we try and be civil in the circumstances, please? This isn't really a time to get snarky.

To give HMRC their due, they collected responses to the community questions we put to them and should be thanked for addressing our concerns when there is a lot of pressure coming at them from other directions (like new policies to formulate on the hoof).

Also I'm pretty certain the virus would be a reasonable excuse for late filing under existing tax law.

Thanks (2)
avatar
By fileli
31st Mar 2020 04:56

This is an automatic offer with no applications required. UK Registered businesses will not need to make VAT payments normally due with VAT returns during this period. Taxpayers will be given until the end of the 2020-21 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. https://www.prepaidcardstatus.mobi/

Thanks (0)