COVID-19 – VAT deferment and requirement for full digital links delayed
The following is a summary of the VAT deferral scheme, based on information available at 30 March 2020.
The VAT Deferral scheme
HMRC has said that “If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:
- defer the payment until a later date
- pay the VAT due as normal
It does not cover VAT MOSS payments.
HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.”
Points to be aware of include:
- The VAT return will still need to be submitted to HMRC on time.
- VAT reclaims and refunds - HMRC will continue to process these as normal during this time.
- The deferment of VAT payment is automatic – businesses do not need to apply for this facility, but
HMRC has noted that for those businesses who normally pay by direct debit, they should cancel this as soon as they can. If the direct debit is not cancelled, the payment will automatically be taken.
Businesses which choose to defer their VAT payments as a result of coronavirus (COVID-19), must pay the VAT due on or before 31 March 2021. Further information about how to repay the VAT deferred will be available from HMRC soon.
VAT payments due following the end of the deferral period will have to be paid as normal.
HMRC guidance can be found at https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19
Making Tax Digital – full digital links postponed
HMRC has announced on 30 March that “We understand that the impact of COVID-19 is creating extremely difficult times for all, and we are committed to helping in every way possible all those businesses facing unprecedented challenges.
Therefore, we are providing all MTD businesses with more time to put in place digital links between all parts of their functional compatible software. This means that all businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.”