Direct Debit reminder as coronavirus VAT deferral window closes

HMRC has reminded agents that the period for deferral of VAT payments, given as part of coronavirus relief, is coming to an end.

Payment of VAT falling due between 20‌‌ March and 30‌‌ June 2020 can be deferred until 31‌‌ March 2021.

However, VAT returns with a payment due date after 30‌‌ June must be paid in full, on time.

As part of the Government’s support for businesses during COVID-19, HMRC gave businesses the option of deferring their VAT payments if they were unable to pay on time, without incurring late payment interest or penalties.

If you haven’t deferred any VAT payments, you don’t need to take any further action.

Where VAT has been deferred and would normally be paid by Direct Debit, it will now be necessary to reinstate the instruction. This must be done at least three working days before submitting the VAT return in order for HMRC to take payment.

For further details go to GOV.UK and search for ‘Pay your VAT bill’.

HMRC reminds agents that VAT payments that were deferred under the emergency measures should be paid in full on or before 31‌‌ March 2021. You can make ad hoc payments or additional payments with your subsequent VAT returns to reduce the amount outstanding, if you wish.

Businesses that cannot pay the VAT due should contact HMRC before the payment is due to discuss additional time to pay.

Tax expert and former AAT president, Brian Palmer, comments:

“It’s a good thing that HMRC is writing out to the VAT registered to remind them to reinstate their Direct Debits. It is highly like that many will not have thought they needed to do this. They probably would not have realised  until they received a reminder from the Tax Department that their 30 June liability remains unpaid!”

David Nunn is a former Content Manager at AAT.