As VAT deferral scheme ends – can you meet your payments?

On 20 March 2020, the Chancellor announced that UK VAT registered businesses could delay the payment of VAT return liabilities falling due between 20 March and 30 June 2020.

Businesses who chose to delay their VAT payments did not have to pay their VAT liabilities when due but could defer them without them being liable for interest or penalty charges. VAT returns had to be submitted on time, but the payments can be delayed to on or before 30 March 2021.

If you wanted to defer your payments but failed to cancel your direct debit, it may be possible to claim a refund. Click here for details https://www.cowgills.co.uk/news/missed-the-vat-deferral-you-might-be-eligible-for-a-refund/

Scheme ended on 30 June 2020

HMRC is now reminding businesses that the VAT payments deferment scheme ended on 30 June 2020 and businesses which took advantage of the coronavirus crisis easement will now need to;

• Reinstate bank direct debits in time for HMRC to take payments due from 1 July onwards;
• Submit VAT returns as normal and on time; and
• pay the VAT in full for payments due after 30 June 2020.

Paying VAT liabilities

So, not only will businesses now be required to meet their VAT payments as they fall due, they will also need to make plans as to how they will pay any deferred amounts by 30 March 2021.

This can be delayed until the due date, or HMRC will accept payments on account of the deferred amount, throughout the period to 30 March 2021.

However, in either scenario, this will place a further strain on cashflow as businesses navigate through this difficult period, whilst the lockdown restrictions begin to ease.

For businesses who are going to struggle to make VAT payments, it might be possible to agree a time to pay (TTP) arrangement with HMRC.  TTP arrangements should be applied for as soon as a business realises there is going to be a problem.  However, HMRC will expect to see evidence that your business has been unable to raise funds elsewhere, and clear and realistic plans about how the business will meet the proposed repayments under the TTP arrangement.

HMRC are more likely be sympathetic if you approach them with a well presented case, with supporting evidence as to how your business can manage its cashflow restrictions in this difficult period.

We have significant experience of liaising with HMRC on behalf of business owners, and if required, we can assist businesses negotiate TTP arrangements.

If this is of interest, or you are concerned about your ability to meet any of your VAT payments, whether the amounts due for post 1 July 2020 returns or amounts deferred, please get in touch. Email enquiries@cowgills.co.uk and one of the team will be in touch.