VAT-registered businesses have been reminded by the UK’s professional body for taxation that direct debits should be cancelled in good time before the next VAT return submission deadline in order to take advantage of the government’s offer of deferring VAT payments until next year.
The Chartered Institute of Taxation (CIOT) has warned that the next due date for VAT returns is next week, falling on Thursday, May 7, and businesses wishing to take advantage of the deferral opportunity should cancel their direct debits as soon as possible, and ideally five working days beforehand.
Chancellor of the exchequer Rishi Sunak announced on March 20 that businesses had the option to defer VAT payments due between March 20 and June 30. The VAT due must be paid by March 31 next year, but can be paid earlier. VAT payments can also be paid as normal on their due date. Deferred VAT will not be subject to interest or penalties from HM Revenue & Customs.
HMRC do not need to be informed where a taxpayer wishes to defer VAT, however in the case of direct debit payments they will take the VAT payment as usual if the direct debit arrangement has not been cancelled. Direct debit arrangements should be reinstated to collect VAT payments from July 1 onwards.
John Cullinane from the CIOT said: “Hundreds of thousands of businesses will be getting their Coronavirus Job Retention Scheme grants this week – but they should not forget about the other government help which can assist cash flow in a time when financial pressures are high.”
In the case of deferred VAT payments, VAT returns must still be submitted as usual by the relevant deadline. VAT payments eligible for deferment are payments for monthly or quarterly returns, payments on account and annual accounting advance payments that are due in the period March 20 to June 30. Import VAT and VAT due under the “mini-one-stop-shop” (MOSS) scheme are not eligible for deferment. Other indirect taxes such as customs duty, excise duty, insurance premium tax, environmental taxes and machine games duty are also not included under the deferral offer.
Businesses that require further financial assistance may wish to contact HMRC about its enhanced “Time To Pay” (TTP) terms. HMRC has also opened a dedicated helpline for taxpayers having problems paying their taxes due to coronavirus, which can be reached on 0800 024 1222.
1st May 2020.