In perhaps one of the first times a delay has been good news, the Chancellor announced that VAT payments due between 20 March and 30 June will be deferred. Businesses will have until the end of the 20/21 tax year to settle liabilities from this period, giving a useful cash flow benefit. At the moment, there is very little detail on this from HMRC, and lots of speculation from everyone else. So, I will continue to update this. I hope the comments below help you manage your VAT cash flow effectively through this very unusual time we find ourselves in!
VAT payment returns
This deferment will apply to all UK businesses, and will be automatic. There is no need to apply for this. Direct debits will not be cancelled automatically by HMRC so for those of you who do pay by direct debit, I would advise that these are cancelled as soon as possible for this quarter.
We expect the deferment period to apply to VAT payments which are due between now and 30 June. This will include those of you who submit returns for quarters/months/years ending February, March and April, and presumably import VAT qualifying under the deferment rules up to the month ending 31 May. It will also include payments on account, balancing payments and annual accounting installments due for payment over this period.
It will NOT cover MOSS payments.
Businesses will then have until the end of the 2020/21 tax year to pay VAT incurred throughout this period to 30 June. We expect this to mean that businesses would pay back throughout this year as and when they are able to, rather than having to make set installments, such that the full amount could be paid back on the last day of the tax year if you'd prefer (although I think "prefer" is a strong word here!). HMRC will not charge interest or penalties for these deferred payments.
VAT returns are still expected to be submitted as normal. Please get these in to avoid any penalties later down the line.
At present, the latest VAT return this will cover will be returns for the period ending April (due June 7). Depending on how things progress with the Coronavirus, it may be that this deferment period is extended in due course. (We of course really hope that things will be starting to pick up for all of us well in advance of this such that this will not be necessary though!).