The next quarterly VAT payments have been deferred by the Chancellor such that no VAT will be due between now and the end of June. Instead, businesses will have until 31 March 2021 to settle this deferred liability. The government has estimated that this deferral will help free up £30 billion to help businesses with their cashflow in the short term.
Any payments deferred during the suspension period will need to be settled before the end of the 2020/21 financial year (31 March 2021).
It has been confirmed that direct debits will need to be cancelled by the VAT registered entity. Any which are not cancelled will result in the money being taken by HMRC. This also means that the DD will have to be set up again at some point or payments made by another method once we are out of the deferral period.
HMRC has stated that it will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.
Further updates have cited that this is applicable for UK VAT registered businesses that have a VAT payment due between 20 March 2020 and 30 June 2020, so we presume this does not apply to overseas businesses, although this is not confirmed.
It has also been confirmed that this deferral does not cover VAT MOSS payments.
VAT returns should be filed as normal during the suspension period. Any VAT refunds due will be paid by HMRC as normal. Full guidance can now be found here.
Who will be affected?
All VAT-registered businesses.
When does it take effect?
20 March 2020.
Are there any exceptions?
None - the arrangements are automatic, no application is required.
Please direct any further queries on this VAT alert to a member of the Indirect Taxes team.
Furthermore, in relation to tax/VAT disputes that are currently being dealt with by the First-Tier Tax Tribunal (FTT), the FTT Tax Chamber President, Judge Greg Sinfield, has issued the following statement:
"Conduct of Tax Chamber proceedings during the COVID-19 pandemic
Until further notice, there will be no hearings at which persons are physically present in any proceedings in the Tax Chamber of the First-tier Tribunal. All applications and substantive appeals will be dealt with on papers/email as far as possible and decided by a judge sitting alone. If a matter cannot be dealt with on papers, a hearing by telephone (or video if available) will be arranged as soon as possible. If a case is not suitable for hearing by telephone or video then it will be listed for a physical hearing on a date in the future when it is safe to do so. ….”