The VAT Deferral Scheme is coming to an end, what do I need to do next?
22nd June 2020
The option to defer VAT payments between 20 March and 30 June was welcomed by many businesses as it freed up much-needed cash for them during the lockdown. In order to take advantage of this scheme, businesses either didn’t make the payment or they cancelled their direct debit to prevent the payment being taken automatically.
As the VAT payment deferral period ends on 30 June, from 1 July VAT registered businesses must:
- submit VAT returns as normal, and on time
- pay the VAT in full on payments due after 30 June
- remember to re-setup their Direct Debit instruction at least three working days before the payment is due if they want to continue paying by direct debit.
Any payments that were deferred between 20 March and 30 June 2020 must be paid by 31 March 2021.
How to pay back deferred payments
If you normally pay by bank transfer
You can add an extra amount to any quarterly or monthly VAT payments between now and 31 March 2021. If you choose to do this, please make sure that any additional payment reference refers to the current VAT return period to ensure that the amount paid is not allocated to the unpaid period in full.
If you pay by direct debit:
HMRC has not released guidance on how to pay back the deferred VAT if you pay by direct debit. More guidance from HMRC is expected on how deferred VAT can be paid back in due course.
If you were unable to cancel your direct debit in time to defer the payment and were unable to take advantage of the deferral scheme but still feel to do so could be of benefit or you are struggling to keep up with your VAT payments, please contact Jessica Mason on 01922 422292. Jess will happily talk through your circumstances and can advise on other HMRC schemes that could improve your business' VAT cashflow.