Covid-19 VAT Deferral Update

In March 2020, the Government announced that VAT payments on returns between 20 March and 30 June, could be automatically deferred until 31 March 2021. Returns had to be submitted as normal.

Those who deferred payments also cancelled the VAT direct debits that were due to be made from their bank accounts.

The following payments were deferred:

  • quarterly and monthly VAT returns’ payments for the periods ending in February, March and April
  • payments on account due between 20 March 2020 and 30 June 2020
  • annual accounting advance payments due between 20 March 2020 and 30 June 2020

The deferral does not apply to VAT returns ending on 31 May (including monthly returns) where the payment and return due date is 7 July. Any payments due in this period need to be made on time.

HMRC issued an email reminder on the 18 June 2020 that direct debit payments need to be set up again to enable HMRC to take the payment value shown on “post deferment period” returns. If direct debits cannot be set up in time alternative methods of payment should be used to make the required payment by the due date. Additional banking fees may be involved if paying by CHAPS or corporate credit card.

If there are continued cashflow issues and the payment cannot be settled in full by the due date HMRC should be contacted and time to pay arrangement agreed and confirmed.

We are here to help

If you would like further information, or have any queries, please get in touch with your usual Baldwins contact.

Please also refer to our COVID-19 Hub for further COVID-19 related information, which is regularly updated with the latest news, insight and details of the economic support and measures as they are announced by our Government.