COVID-19 and VAT
... Deferring your Payments
Ever since the COVID-19 crisis kicked off, the UK government’s been making an effort to lighten the load of the people and businesses affected. As part of those efforts, HMRC’s made a few temporary changes to the VAT rules.
From the 20th of March to the 30th of June 2020, businesses have the option to defer the date of their VAT payments. If they do, HMRC won’t charge any interest or hand out any penalties for the deferred payments. In fact, they’ll do this automatically - meaning you won’t even need to let them know you’re deferring them. You will, however, still need to submit your VAT returns on time as normal.
Of course, the taxman always has rules about what you can and can’t do. You can only defer:
This means, for instance, that you can’t defer VAT MOSS or import VAT payments. However, HMRC will keep the wheels rolling on VAT reclaims and refunds as normal. They estimate that most repayments will be made within 5 working days. You won’t be able to offset any repayments against the VAT you’re deferring, but they will count against existing debts. If your business is in a repayment position, you can arrange online to have your monthly returns moved to boost your cash flow.
Once the deferral period ends, you’ll obviously need to start making your VAT payments again. For payments on account, you might find that your balancing payment falls outside the 20th of March – 30th of June window. If that happens, you’ll have to pay the balancing payment minus any deferred payments.
If you usually make your VAT payments by Direct Debit, it’s up to you to cancel them to make sure the money doesn’t go out automatically on its usual schedule. It’s less hassle than trying to correct the problem later, and can usually be done online if you’re signed up for internet banking.
Remember that this isn’t the only help you might qualify for. Depending on your situation and needs, you might be able to use the new Coronavirus Job Retention Scheme, the Self-Employed Income Support system, to take out a Coronavirus Business Interruption Loan or even set up a good, old-fashioned Time to Pay arrangement. There’s a surprising amount of assistance and advice on offer.
Most importantly, remember that you can still come to RIFT with any problems or questions that crop up. We might all be keeping each other at arm’s length these days, but it’s more important than ever that we stay in touch. Send up a flare at the first sign of trouble, and keep checking back for more voices from the RIFT...