Coronavirus (COVID-19) and VAT ― delaying payments

Produced by Tolley
  • (Updated for Budget 2021)
  • (Updated for Coronavirus (COVID-19))

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Coronavirus (COVID-19) and VAT ― delaying payments
  • VAT deferral for payments due 20 March 2020 ― 30 June 2020
  • What kinds of payments were covered by the deferral?
  • What kind of payments were not covered by the deferral?
  • Implications for direct debits
  • Correcting errors relating to the deferral period
  • VAT deferral new payment scheme
  • Eligibility for the new payment scheme
  • Instalment options
  • Allocation of payments ― general principles
  • More...

Coronavirus (COVID-19) and VAT ― delaying payments

This guidance note covers measures in place to allow taxpayers to defer VAT payments as a result of pressures faced due to the coronavirus pandemic.

For an overview of the impact of coronavirus on VAT more broadly, see the Coronavirus (COVID-19) and VAT ― overview guidance note.

VAT deferral for payments due 20 March 2020 ― 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 2020.

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

  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)

Pay VAT deferred due to coronavirus (COVID-19)

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 measure.

What kinds of payments were covered by the deferral?

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

  1. payment for quarterly and monthly VAT returns ending February, March and April 2020

  2. payments on account

Popular documents