Commentary

V1.402 Coronavirus (COVID-19)—delaying payments

Part V1 General principles and rates of tax

V1.402 Coronavirus (COVID-19)—delaying payments

V1.402 Coronavirus (COVID-19)—delaying payments

This paragraph examines measures for delaying payments of VAT in the context of the coronavirus (COVISD-19) pandemic.

For an overview of the impact of COVID-19 on VAT more broadly (and various VAT measures introduced to curb its economic impact), see V1.401.

VAT payment deferral for payment due between 20 March 2020 and 30 June 2020

Many businesses experienced a rapid and unexpected decrease in their revenue streams as a result of the coronavirus outbreak, and consequently suffered cash flow problems that impacted their ability to pay their VAT liabilities to HMRC. In light of this, businesses were allowed to defer VAT payments that fell due between 20 March 2020 and 30 June 20201.

In relation to the payments that have been deferred, HMRC presented taxpayers with three choices2:

  1.  

    •     pay the deferred VAT in full on or before 31 March 2021

  2.  

    •     join the VAT deferral new payment scheme (see further below in this guidance note)

  3.  

    •     contact HMRC to discuss 'time to pay' arrangements (see further below in this guidance note)

The deferral was only in relation to the payment of VAT so it did not affect obligations to submit VAT returns on time.

Interest and penalties should not be charged on any amounts that have been deferred under this measure3.

Payments covered by the deferral

The deferment measure included all of the following kinds of VAT payments to HMRC4:

  1.  

    •     payment for quarterly and monthly VAT returns ending February, March and April

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