We have highlighted some of the common questions and answers relating to deferring VAT payments during the Coronavirus pandemic.
Can I defer my VAT payments?
It is confirmed that payments in respect of VAT returns for periods ending 29 February, 31 March and 30 April can deferred until 31 March 2021. Any payments that are due after 30 June 2020 cannot be deferred. Whilst HMRC do not specifically refer to VAT returns for the period ended 31 May 2020, it is assumed that where you are required to pay by 30 June 2020 (payment on account traders) then these payments are also deferred. It should be noted that for most businesses the payment for the 31 May 2020 VAT return will be due to be made on 7 July 2020 and is therefore not deferred under the current guidance.
If you choose to defer a VAT payment, you do not need to tell HMRC you are doing so and you must pay the VAT due on or before 31 March 2021. If you normally pay by Direct Debit or standing order, you will need to cancel this as otherwise HMRC will take payment.
Do I have to continue to file my VAT returns and other VAT compliance documents (EC Sales Lists, Reverse Charge Sales Lists, intrastats)?
Yes, there are no special exceptions for failure to file and we encourage all businesses to continue to meet their filing obligations.
I make payments on account, are these deferred?
Yes, the deferment applies to all VAT payments which are due between 20 March and 30 June 2020 – any payments due after this period will have to be paid as normal. If you have deferred a payment on account this does not need to be paid under 31 March 2021. The deferred payment on account is deducted from the balancing payment owed on the filing date of the VAT return. The balancing payments due on 31 July for 30 June VAT returns, or 31 August for 31 July VAT returns are therefore calculated as usual.
Can I defer payment of import VAT?
Registered importers, who are facing severe financial difficulties, can apply for an extension to pay import VAT. The onus is on the importer to demonstrate how the current Covid-19 crisis has impacted their financial position. HMRC may then grant additional time for import VAT to be paid without holding up the customs clearance process (subject to any conditions HMRC may impose). Importers can apply for this time to pay by contacting HMRC at the following email address [email protected].
For registered importers that are duty deferment account holders unable to make their scheduled payment of deferred customs duties and import VAT due on 15 May, there is also the opportunity to apply to HMRC for a full or partial extension of time to make the payment without impacting their guarantee. The account holder should contact the Duty Deferment Office on T: 03000 594243 or E: [email protected].
Duty deferment account holders will be able to use their accounts during the extended payment period agreed, unless they default on a subsequent payment in that period, in which case HMRC may consider suspending their account. The outstanding payment will not affect their duty deferment limit so they will not need to increase their guarantee to cover the outstanding payment. Where HMRC agrees to an extended payment period, interest will not be charged on the outstanding payments provided they are paid in full by the agreed date.
In all cases decisions will be taken on a case-by-case basis and could be refused. The measure is not available to non-registered importers.
Will HMRC offset one group company’s liability against another group company’s VAT refund?
There is no indication that this will be the case. Remember, where a VAT group is in place there is one VAT return and therefore in that case offsetting will occur as a result of ordinary VAT accounting.
Can I defer the payment of a VAT assessment I have received which falls due for payment in the deferral period?
The deferment applies to liabilities arising from VAT returns submitted. There has been no specific announcement on this point, however HMRC currently indicates the deferment applies to VAT return liabilities. There is the option of contacting HMRC to agree time to pay, but we anticipate difficulties in getting arrangements agreed given that HMRC is receiving an extremely high volume of time to pay requests through the dedicated helpline.
Can I defer a payment due in the deferment period which is part of an existing time to pay arrangement with HMRC?
Again, there has been no specific announcement on this point. However, as per the above question, we would expect taxpayers to have to continue to fulfil existing time to pay arrangements with HMRC. There is the opportunity to contact the time to pay helpline and perhaps agree a new time to pay arrangement given the current economic climate.
When must the deferred VAT be repaid to HMRC?
31 March 2021. Payment on account businesses should note HMRC has not confirmed how balancing payments due after the deferment period will be calculated.
Can overseas based businesses with UK VAT registrations defer VAT?
HMRC has confirmed that all businesses with a UK VAT registration have the option to defer VAT payments which are due for payment between 20 March and 30 June. This means non-resident companies registered for VAT in the UK, can defer their UK VAT payments, for this period.
Does the deferment mean I do not have to pay my suppliers VAT?
This is a commercial issue regarding payment. The supplier will eventually have to pay the VAT to HMRC, and you can recover it (subject to the normal partial exemption rules). Suppliers may therefore insist the VAT element is also settled.
Have any measures been put in place to help businesses comply with Making Tax Digital for VAT, in response to the COVID-19 crisis?
All businesses registered for Making Tax Digital for VAT, will now have more time to put in place digital links between all parts of their functional compatible software. We understand HMRC will shortly announce that businesses will now have until their first VAT return period starting on or after 1 April 2021 to put those digital links in place within their VAT reporting process. HMRC has yet to release any detailed guidance on this extension but we expect details to be published shortly.
I am importing medical supplies and related equipment in response to the outbreak. Is there any relief on import duties for such products?
There is a temporary import VAT and customs duty relief available on the importation of certain medical supplies, equipment and protective garments, during the Covid-19 crisis. At this stage the relief is available until 31 July 2020. The relief is available to state and public bodies and also to non-state bodies on application. To be eligible to apply the relief when the goods are being cleared through UK customs, those goods must be of a type which is listed on a specific Covid-19 commodity list which is available on HMRC’s website. The goods must be for sale to the NHS or for distribution free of charge to those affected by, at risk from or involved in combating Covid-19, whilst remaining the property of the party which imported them.
I need to write to HMRC regarding a VAT matter. Is HMRC still processing incoming post?
HMRC has announced it has temporarily closed its post rooms. Any correspondence which would otherwise have been submitted to HMRC through the post should be submitted to the following email address: [email protected] . Matters relating to options to tax should still be sent to the option to tax unit’s email address: [email protected].
I have received a reminder from HMRC to pay a VAT amount I have deferred. What should I do?
We are aware that HMRC are sending out letters to remind taxpayers that a reported VAT return liability has not been paid. These letters are being sent by HMRC under an automated process and they can be disregarded provided the unpaid VAT they relate to qualified for deferral. HMRC have confirmed there is no requirement to contact them in such cases.
Has HMRC temporarily extended time limits to accommodate businesses?
- es, HMRC has temporarily extended the time limit to notify options to tax, from 30 days to 90 days. The extension was initially applicable to elections made between 15 February 2020 to 31 May 2020 (‘the initial period’). HMRC has recently extended the period and the extension now applies to decisions to opt made between 15 February 2020 to 31 October 2020. Email notifications can be sent to [email protected].
- Yes, HMRC is now giving businesses more time to appeal or ask for a review. Businesses normally have 30 days to appeal or ask HMRC for a review, but the time limit has now been extended to give businesses an extra 3 months. Essentially businesses now have 3 months and 30 days to appeal or ask for a review.