VAT support during the Coronavirus pandemic

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HM Revenue & Customs (HMRC) has announced numerous VAT support measures to help UK businesses adversely affected by the Coronavirus pandemic, as follows:

 

Deferring VAT payments

UK businesses can defer their VAT payments which are due between 20 March to 30 June. Read more in our VAT Update.

Following our original VAT Update, HMRC released additional guidance in respect of the VAT deferment scheme, which confirms:

  • VAT Returns must still be submitted by the appropriate due date
  • No interest or penalties will apply to deferred payments
  • Taxpayers do not need to advise HMRC that they are deferring a payment
  • Direct debit instructions to your bank must be cancelled
  • Payments due after the deferral window ends (30 June) should be paid as normal
  • Deferred payments must be settled in full by 31 March 2021
  • Taxpayers who have difficulty paying VAT liabilities after 30 June should consider applying to HMRC for a time to pay arrangement.

The deferment will not apply to payment on account balancing payments which are due after 30 June and it will not extend to payments due for VAT returns with a May quarter end, which have a due date for payment falling after 30 June. Read more.

In addition, businesses unable to pay their 15 May import VAT and Customs Duty liabilities through their Duty deferral account can apply for a temporary deferral of these liabilities if they are in severe financial difficulty. A similar measure has been announced for registered importers that do not have a deferment account. Read more.

Deferring VAT payments: frequently asked questions

We have compiled a list of common questions and answers relating to deferring VAT payments during the Coronavirus pandemic. More information can be found here.

VAT direct debits

HMRC has said that businesses should cancel their VAT direct debit payment with their bank if they are deferring a VAT payment or seeking a time to pay arrangement. This will need to be actioned in sufficient time so that HMRC does not attempt to automatically collect on receipt of your VAT return.

Guidance for VAT payments on account

HMRC has updated its payment on account guidance to confirm that any payments on account due after 20 March are deferred. The guidance states that payments due until 30 June are deferred.

The updated guidance also now confirms that balancing payments due after 30 June are reduced by the deferred POAs. It does however state that deferred POAs are due to be paid on 31 March 2021. Read more.

VAT and medical supplies/PPE

HMRC has also announced a temporary import VAT and customs duty relief on the importation of certain medical supplies, equipment and protective garments, during the Covid-19 crisis. The relief is available to state and public bodies and also to non-state bodies on application.

From 1 May until 31 July, PPE purchased by care homes, businesses, charities and individuals, to be used to protect against Covid-19, will be free from VAT. The government estimates that this measure will result in a saving of more than £100 million for care homes and businesses dealing with the Coronavirus outbreak.

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