Missed the VAT deferral? You might be eligible for a ‘refund’
HMRC has confirmed that taxpayers who wished to defer VAT payments due between 20 March 2020 and 30 June 2020, but failed or missed the deadline for cancelling their Direct Debit in time can claim a refund.
The quickest way to do this, according to HMRC, is to submit a Direct Debit Indemnity Claim to their bank, expressing they want to claim a refund under the Direct Debit Indemnity Scheme (DDI). HMRC has said that there is no time limit for this request.
If the taxpayer wants a repayment from HMRC rather than going through their bank, they must make sure that their bank details are updated using the online services.
Due to coronavirus restrictions, HMRC are not issuing Payable Orders and so it may take up to 21 days for the refund to be received if the DDI Claim process is not used.
HMRC are expected to provide further guidance on the payment of the deferred amount at the end of the deferral period.
Businesses will still need to make arrangements to pay any VAT which falls due from 1 July 2020 to 31 March 2021 (i.e., amounts that are not deferred).
The ICAEW Tax Faculty is awaiting confirmation that reinstating a Direct Debit will not result in the deferred VAT being collected immediately. A change in the way that HMRC collects Direct Debits for those in Making Tax Digital (MTD) for VAT does make this a possibility so HMRC will needs to ensure that does not happen.
Bear in mind that whilst this ‘refund’ might assist with cash flow, the VAT will ultimately have to be paid. Time to pay (TTP) arrangements can be negotiated with HMRC and additional funding solutions are available. Get in touch for further advice, email firstname.lastname@example.org
The information was correct at time of publishing but may now be out of date.