Back in March, the government announced temporary changes to VAT payments to help businesses adversely affected by Coronavirus to manage their cash flow. This enabled UK-VAT registered businesses to defer any VAT due on 7th April 2020 (February quarter), 7th May 2020 (March quarter) and 7th June 2020 (April quarter) to 31st March 2021. In order to defer the VAT payments, businesses were asked to cancel their direct debit mandates.
The VAT deferral period will come to an end on 30 June 2020, which means that any VAT payment due after 30 June will need to be paid as normal – starting with the May 2020 quarter.
If you cancelled your direct debit mandate or usual payment method, this now needs to be reinstated to ensure the payment can be taken in July, and going forward. Direct debit mandates usually need to be set up three working days before a VAT return is filed. We are unable to do this on your behalf. If payment is made late then the usual penalties and interest may apply.
Businesses that find themselves struggling to make upcoming VAT payments are advised to contact HMRC at the earliest to explore the possibility of agreeing a Time to Pay arrangement.
We await further guidance from HMRC regarding how the deferred VAT will be collected by 31 March 2021.
If you have questions about upcoming VAT payments, please contact our team.