As businesses are navigating through the uncertain times due to the COVID-19 pandemic, HMRC have made temporary changes to VAT to ease cash flow on businesses.
This blog post has been created on the back of several queries raised by customers using our MTD for VAT solution ahead of making their Q1 2020 (or March 2020 monthly) VAT submissions.
The changes made by HMRC
The key change made by HMRC is to give VAT registered business to the option defer their VAT payments due between 20 March 2020 and 30 June 2020.
If a business opts to defer payments due between the dates as noted above, they have until 31 March 2021 to fully repay the deferred amount.
How to take advantage of these changes
Taking advantage of this temporary change is easy, but there are a few key practical issues:
- You do not have to tell HMRC you are deferring your VAT payment.
- VAT registered businesses must still submit their VAT returns on time by the usual dates as mandated by HMRC.
- If you make payments by Direct Debit you must cancel it as soon as possible, preferably prior to making your on-time VAT submission.
- Remember to fully repay deferred amounts by the deadline on 31 March 2021.
Further information regarding the VAT payment deferral can be found on the HMRC website.
The government also offer a ‘Time to Pay’ service if your business is experiencing financial difficulties – this can also apply to VAT (amongst other taxes) but you must seek approval from HMRC for any payment schemes.
The information noted above should not be considered financial or professional advice and is general in nature. You should seek advice from your tax advisor as each and every business situation may vary.
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