While the COVID-19 pandemic continues the VAT deferral does not. This article provides some advice if you have taken advantage of the deferral, if you are struggling to make future payments or have not paid VAT on time due to COVID-19.
End of the VAT deferral
The option to defer paying VAT ends on 30 June 2020. This means that VAT returns with a payment due date after 30 June, for example returns for periods ending on 31 May 2020, must be paid in full on time.
If you have deferred paying VAT by cancelling your Direct Debit and wish to pay in this way going forward you should now reinstate the Direct Debit mandate. This should be done at least three working days before submitting the VAT return if HMRC are to take payment in this way.
If you are struggling to pay your tax bill on time HMRC do have a Time to Pay service who may agree to delay payment of the tax. If the request relates to VAT the HMRC advice asks you to quote ‘V1’.
Contacting HMRC and agreeing a Time to Pay arrangement before the due date of a return should avoid a surcharge for late payment or a default being recorded. Having a default recorded could lead to a surcharge if future returns are submitted or paid late.
HMRC are likely to ask for details of why payment cannot be made on time. Before contacting HMRC establish the amount of VAT outstanding, how much you can afford to pay, when payment can be made and ensure this can be justified. Partial payment on time will also help if this is possible.
The telephone number for the Payment Support Service is 0300 2003835 and they are open 8am to 4pm Monday to Friday.
VAT payments that have been deferred have to be paid in full on or before 31 March 2021. Ad hoc payments or additional payments with a subsequent VAT return to reduce the amount outstanding can be made.
This link takes you to the HMRC guidance, including the bank account details, on how to make payments of VAT to HMRC.
Penalties for late payments
HMRC have advised they will accept coronavirus as a reasonable excuse for missing some tax obligations (such as payments or filing dates). They ask you to explain how you were affected by coronavirus in your appeal or review request and advise you must still make the return or payment as soon as you can.
If a late payment penalty has been issued you should normally ask HMRC to review this or submit an appeal within 30 days. However where a business has been affected by COVID-19, HMRC have advised they will allow an extra 3 months to appeal any decision dated February 2020 or later. You should however appeal or request a review as soon as you can, and explain the delay is because of coronavirus.
If you would like to discuss any of these issues please contact your usual AG contact or email firstname.lastname@example.org.