Category: Tax

COVID-19: Government defers VAT payments

18 Jun 2020

On 20 March 2020, HMRC announced a deferral scheme for VAT for all UK businesses to help them manage the impact of COVID-19. This also applies to businesses that are not established in the UK but are registered for VAT here.


Please note, the VAT deferral concession announced by HMRC in March ends on 30 June 2020.

If direct debits have been cancelled please ensure that they are reinstated so that any payments due after 30 June are made on time. While we hope that HMRC will apply a light touch with regard to late payments that are due in July onwards this cannot be guaranteed. Taxpayers that are late either submitting VAT returns or making full payment are captured by the default surcharge regime. This can lead to 15% surcharge on the amount of VAT due where VAT return submissions or payments are habitually late. 

VAT payments could be deferred for three months beginning on 20 March and ending 30 June. For those on standard quarterly VAT returns, the returns affected were –

  • February 2020, due on 7 April
  • March 2020, due on 7 May
  • April 2020, due on 7 June

Therefore, the deferral did not apply to the set of returns being –

  • May 2020, due on 7 July
  • June 2020, due on 7 August
  • July 2020, due on 7 September 

VAT returns still need to be submitted but any VAT due will not be payable until the end of the financial year  -  31 March 2021. 

Richard Staunton, VAT Partner at Gerald Edelman, explains this further in his article: Government defers VAT payments to help businesses manage cash flow during the COVID-19 crisis.

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