COVID-19. VAT and tax deferral

To help businesses and individuals manage their cashflow during the Covid-19 crisis, HMRC are deferring VAT payments that become due between 20 March and 30 June 2020, and also the second self-assessment payment on account for the tax year 2019/20 due on 31 July 2020.

VAT

Deferral is automatic, although you can pay as normal if you wish. There is no need to tell HMRC that you are deferring a VAT payment.

• VAT returns still need to be submitted on time.
• Deferred VAT must be paid by 31 March 2021, and no interest or penalties will be charged on the deferred amount. The actual date may be a month or two later for quarterly VAT returns, but this has yet to be confirmed.
• VAT refunds will continue to be made as usual.
• If using the annual accounting scheme, payments on account and the annual payment can also be deferred. However, VAT MOSS payments are not covered.

If you pay VAT by direct debit you will need to cancel the direct debit immediately, otherwise HMRC will automatically make the withdrawal from your bank. Check before reinstating the direct debit because the deferral period could potentially be extended.

Payment on account

If you’re due to pay a self-assessment payment on account by 31 July 2020 but you are going to have difficulty in making the payment because of the impact of Covid-19, then you can defer the payment until 31 January 2021; this doesn’t just apply to the self-employed. As for VAT, deferral is automatic, with no interest or penalties.

If you are going to have difficulty making the payment due on 31 January 2021, you might be able to set up a payment plan with HMRC.

Before deferring the payment, remember that the deferred amount will become due at the same time as your balancing payment for 2019/20 and the first payment on account for 2020/21. So as not to find yourself with a large bill at that time, consider making advance payments against this bill if you possibly can.

You can find out more about the government’s COVID-19 measures to support businesses here.

For more information relating to COVID-19, please view our COVID-19. Information Quick Find page