Covid-19: VAT payments deferred for three months

The government has announced a three-month deferral for VAT payments until end June for all UK businesses with HMRC working all hours to thrash out the detail

The VAT deferral will apply from 20 March 2020 until 30 June 2020.

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.

It is not clear as yet how the scheme will work under Making Tax Digital for VAT reporting, for example requiring a '1' or '0' entry to validate.

An HMRC spokesperson told Accountancy Daily: ‘HMRC is urgently working through the details of the announcement and will advise businesses as soon as we can.’

Businesses should cancel their HMRC VAT direct debits if they plan to stop VAT payments over the three-month deferral.

An HMRC spokesperson said: 'For those customers who are unable to pay VAT due between 20 March and end June 2020, you have the option to defer that payment until 31 March 2021.

'You will not need to apply for deferral as eligibility is automatic. Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do this in sufficient time.'

Further coverage on the VAT deferral to follow.

HMRC guidance, Deferral of VAT payments due to coronavirus (Covid-19), issued 26 Mar 2020

Sara White

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