Businesses reminded about VAT help as deadline approaches

Businesses that wish to defer VAT return payments must ensure that they cancel their direct debit in good time for VAT returns that are due on Thursday 7 May, warns the Chartered Institute of Taxation (CIOT).

The deferral is one of the measures introduced by the Government to help businesses manage during the COVID-19 crisis, when many businesses have been closed or otherwise severely restricted.

The Government announced on 20 March 2020 that taxpayers could defer VAT return payments arising in the period up to 30 June 2020, and only have to pay those deferred amounts by 31 March 2021.

Businesses wishing to take advantage of the deferral should cancel any direct debits as soon as possible, and ideally five working days before the filing date of the return. The next due date for monthly and quarterly VAT returns is 7 May 2020, which is not far away, warns the CIOT, and represents the filing deadline for the most ‘popular’ VAT return quarterly stagger within the deferral period (quarter ended 31 March 2020).

If businesses do not cancel the direct debit, HMRC will collect any VAT due as usual. The VAT deferral easement also includes interim and balancing payments for the payments on account scheme and VAT payments for annual accounting where these payments would normally be due in the period from 20 March to 30 June 2020.

John Cullinane, Tax Policy Director at the CIOT, said:

“Hundreds of thousands of businesses will be getting their Coronavirus Job Retention Scheme grants this week – but they should not forget about the other government help which can assist cash flow in a time when financial pressures are high.”

If businesses do not want to defer VAT payments, they should be paid on time as usual. HMRC will continue to process VAT reclaims and refunds as normal and most repayments are paid within 5 working days.

Direct debits should be reinstated to collect VAT payments due from 1 July 2020 onwards. The VAT easement does not apply to import VAT or VAT due under the mini-one-stop-shop scheme (‘MOSS’). It does not apply to other indirect taxes such as customs duty, excise duty, insurance premium tax, environmental taxes and machine games duty.

For those businesses that require additional financial assistance, HMRC has enhanced its ‘Time to Pay’ system and has opened a dedicated helpline for those experiencing financial distress as a result of the COVID-19 measures and find themselves unable to pay their tax on time or have other existing tax liabilities: 0800 024 1222.

Notes for editors

1.       HMRC guidance on VAT payment easement

2.       CIOT tax technical information on HMRC COVID measures

The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 (Out of hours contact: George Crozier, 07740 477 374)