UK defers £30bn VAT payments till 30 June on COVID-19 coronavirus
- Apr 3, 2020 | Richard Asquith
Update 3 April, HMRC confirms that import VAT is still payable during the COVID-19 emergency. The 3-month payment deferral will not apply.
Update 31 March, HMRC has confirmed that VAT payments-on-account may also postpone their VAT payments during the 3-month deferral to 30 June 2020.
Update 30 March, HMRC is announcing this morning that Making Tax Digital for VAT phase 2, digital recordkeeping and links, is being postponed until 1 April 2021. It was scheduled to start 1 April 2020.
Update 26 March, VAT payers on Direct Debits must stop them with their bank or the VAT may be withdrawn. Non-resident (foreign) companies with a UK registrations are entitled to the deferment. No interest will accrue on postponed VAT. Payers on Mini One-Stop-Shop MOSS returns are not included in the scheme.
Update 20 March - the UK has announced that all VAT payments are postponed for the next three months until the end of June 2020 during the coronavirus pandemic. This will benefit around 2 million VAT payers, and delay £30 billion in taxes since it includes pre-crisis trading. The VAT is then due at the end of the 2020/21 financial year.
Any deferred UK VAT will be due in 2021
The VAT not paid during the period is then due to be paid to HMRC by the end of the 2020/21 financial year, which ends on 31 March 2021.
No interest or penalties will be due on any deferred VAT.
There is no allowances for businesses on special schemes, such as the annual VAT payment. This deferment does not apply to tax payers on the Mini One-Stop-Shop VAT payer. HMRC will continue to process VAT reclaims and refunds as normal during this time.
Returns must still be filed on time to new MTD rules
VAT returns must still be filed on time. There is no special application procedure; it is an automatic measure. Follow Avalara’s live global coronavirus Covid-19 VAT tracker of measures being introduced to reduce the tax burden.
Foreign businesses with UK VAT registration included
Foreign (non-resident) UK VAT registered businesses are included in the scheme, and this has been confirmed by Non-Established Taxable Persons Unit (NETPU) in HMRC's Aberdeen office.
The UK's HMRC on 11 March had announced a telephone support line for businesses and the self-employed concerned about meeting VAT payment deadlines due to the coronavirus COVID-19 outbreak.