HMRC will not charge interest or penalties on any amount deferred
The Chancellor, Rishi Sunak, has announced that businesses will be able to defer VAT payments for a three-month period in 2020. HM Revenue & Customs (HMRC) have confirmed a deferral for all VAT payments due between 20 March 2020 and 30 June 2020 by all businesses with a UK VAT registration to help businesses manage their cash flow.
If you’re a UK VAT-registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:
• Defer the payment until a later date
• Pay the VAT due as normal
It does not cover VAT MOSS payments, which are a way of paying VAT if your business supplies certain digital services to other EU countries. VAT MOSS (which stands for Value Added Tax: Mini One Stop Shop) was introduced so that UK sellers could just pay VAT to HMRC, instead of having to register for VAT in every EU country.
HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement. You will still need to submit your VAT returns to HMRC on time, and they continue to process VAT reclaims and refunds as normal during this time.
If you choose to defer your VAT payment as a result of coronavirus (COVID-19), you must pay the VAT due on or before 31 March 2021. You do not need to tell HMRC that you are deferring your VAT payment.
If you normally pay by Direct Debit, you should contact your bank to cancel your Direct Debit as soon as you can, or you can cancel online if you’re registered for online banking.
VAT payments due following the end of the deferral period will have to be paid as normal.