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COVID-19 UK tax deferral scheme announced

View profile for Eleanor Waters
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 On 26 March 2020 HMRC released further guidance on the COVID-19 VAT deferral scheme.
The VAT payment deferral period will apply from 20 March 2020 until 30 June 2020. VAT payments due in this period will be deferred for all businesses with a UK VAT registration number and this includes businesses overseas who are registered in the UK. 
The deferral scheme is automatic therefore businesses will not need to speak to HMRC to arrange deferral. If a business normally pays by Direct Debit it should cancel the Direct Debit.
If a business chooses to defer VAT payment as a result of COVID-19, it must pay the VAT due on or before 31 March 2021. This affects the following VAT return periods:

  • 02/20 period ending 29 February
  • 03/20 period ending 31 March
  • 04/20 period ending 30 April

PAYE debts will not be covered by the automatic VAT deferral scheme. Businesses should contact HMRC before the due date of submission and request a 3 month deferral to avoid penalties for late submission.
We expect HMRC to publish further information about how to repay the deferred VAT but interest or penalties will not be charged on any amount deferred as a result of the Chancellor’s announcement.

If you require guidance on other ways to defer your payments to HMRC, including time to pay agreements, please do not hesitate to get in touch.