COVID-19: Clarification on deferring VAT payments

• HMRC have issued guidance setting out the process for deferring VAT payments for three months under Making Tax Digital (MTD).
• VAT deferral is available to all UK VAT registered businesses for a three-month period from 20 March 2020 and 30 June 2020.
• HMRC will continue to process VAT reclaims and refunds as normal during this time.
• HMRC’s guidance on VAT referral will need to be used alongside VAT Notice 700/22 to ensure full compliance with MTD.
• HMRC will not charge interest or penalties on any amount deferred.
• You will still need to submit your VAT returns to HMRC on time but will not be required to make the payment if you choose to defer.
• HMRC has also deferred MTD’s mandatory requirement to report through digital links until their first VAT return period starting on or after April 2021.

Aspire Comment

It is essential that you still submit your VAT returns to HMRC. This is not a relaxation of those obligations for VAT registered businesses. Instead, it is simply providing VAT registered businesses with the option to defer VAT payments.

We are still awaiting further guidance as to how businesses are expected to repay VAT once it has been deferred. HMRC state this will be available “soon”.

If you require any further advice on the guidance and support available to your business through COVID-19, such as furloughing staff or redundancy cases, please get in touch with one of our advisors on 0121 445 6178 or email enquire@aspirepartnership.co.uk.