VAT Payment Deferral Update

27 June 2020 - Elizabeth Nichols

As part of the government’s response to support businesses and help them manage their cashflow during the pandemic, they announced that businesses would be able to defer their VAT payments due between 20 March 2020 and 30 June 2020.

The VAT payment deferral period ends next week on 30 June 2020, so we wanted to remind you what action you need to take if you have deferred your VAT payment during this period.   

  • Remember to set-up cancelled direct debits in enough time for HMRC to take payment
  • Submit VAT returns as normal, and on time
  • Pay the VAT in full on payments due after 30 June.

I deferred my VAT payment, when will I need to pay it?

Update: VAT deferred from March 2020 was originally due by 31 March 2021 but can now be spread interest free over 11 equal instalments throughout 2021/22. Businesses will need to opt in and can do so from early 2021.

Any VAT payments you have deferred between 20 March and 30 June should be paid in full on or before 31 March 2021. You can make additional payments with subsequent returns if you wish. It’s important to remember that HMRC is not charging interest or penalties, including surcharge penalties on any amount deferred during the period mentioned above.

Who should I contact if I cannot pay my VAT payment?

If you are unable to pay the VAT due, please contact HMRC as soon as possible, and before the payment is due. More information and contact details for HMRC can be found here.

Remember to have the following information to hand before contacting HMRC:

  • Your reference number (your 10 digit Unique Taxpayer Reference or VAT reference number)
  • The amount of VAT that is outstanding and the reasons why
  • Your proposal to settle the arrears
  • Information about how much you can pay immediately and how long you may need to pay the balance 
  • Your bank details 

Individuals can defer self assessment payments due by 31 January 2021 by agreeing an Enhanced Time TO Pay arrangement with HMRC over a 12 month period. Tax liabilities of less than £30,000 will be able to do this themselves online Liabilities over £30,000 will need to use the HMRC helpline. It means that tax deferred from July 2020 won’t be paid in full until January 2022.

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