To help businesses struggling with their cash flow during the COVID-19 pandemic, VAT registered businesses can opt to defer the payment of VAT that becomes due between 20 March 2020 and 30 June 2020. This will cover returns for the quarter to 28 February 2020 (due by 7 April 2020), quarter to 31 March 2020 (due by 7 May 2020) and the quarter to 30 April 2020 (due by 7 June 2020).
Businesses do not have to take advantage of the option to defer – they can instead choose to pay their VAT as normal. Where they have sufficient income and have received payment from their customers, this may be a preferable option to prevent running into debt later. The VAT will still be due – the payment date is simply delayed.
HMRC will not charge interest where VAT is paid later as a result of this measure.
Businesses that wish to take advantage of the option to defer paying their VAT do not need to tell HMRC – they simply delay paying the VAT over to HMRC.
Cancel direct debits
Where a business has set up a direct debit to pay their VAT, they will need to cancel the direct debit if they wish to take advantage of the deferral option. If they forget to do this, the VAT payment will be taken automatically.
Paying deferred VAT
Any VAT that is deferred must be paid over to HMRC by 31 March 2021.
File returns on time
Deciding to defer payment of VAT does not affect the obligation to file a VAT return. VAT returns that fall due within the deferral window should be filed as normal and on time.
VAT repayments
Where a VAT returns shows that a repayment is due, HMRC will make the repayment as normal.
After the deferral period
When the VAT deferral window comes to an end, VAT for periods outside the window must be paid as usual.
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