Last week, in addition to the headline grabbing Coronavirus Job Retention Scheme and Self Employed Income Support Scheme, the government also announced further help to businesses, self-employed and other taxpayers. These relate to the opportunity to delay the payment of VAT and personal tax as announced last week and then subsequently updated. These are set out below
VAT
Any VAT that falls due for payment in the period that runs 20 March 2020 to 30 June 2020 can now be deferred until the end of the 2020-21 tax year.
This is not a removal of any liability that falls due in this period, but rather a deferral. Businesses will need to ensure that they are able to pay any arrears on or before 5 April 2021 at the latest.
There is no need to seek HMRC’s prior agreement and HMRC will not charge any interest or penalties as a result of this deferment support.
This deferment is optional. Some taxpayers may prefer to make a payment at the normal due date to avoid a larger payment by 31 March 2021
Any refunds and claims due from HMRC will be continue to be processed as normal
** IMPORTANT – VAT PAYMENTS BY DIRECT DEBIT **
New HMRC guidance for business that want to defer payment of their next VAT return up to 30 June 2020 as follows:
If you pay direct debit you should cancel it with your bank as soon as you can. You can do this online if you have online banking.
https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19
SELF ASSESSMENT – SECOND PAYMENT ON ACCOUNT DUE 31 JULY 2020
It has been confirmed that all taxpayers within the self-assessment process, whether self-employed or not, with a second payment on account due for 2019-20 (payable on 31 July 2020), can be deferred until 31 January 2021.
Tax payers should be aware that this is simply a deferral and not a cancellation of the tax due. Those who take advantage will still need to pay their second payment on account for 2019-20 and this will be payable at the same time as any balancing payment for 2019-20 and their first payment on account for 2020-21 (if any is due).
This deferment is optional and there is no need to apply to HMRC in advance. Given the impact on the payment due at 31 January 2021, some taxpayers may prefer to simply make the payment in July 2020 as normal so as to avoid a larger payment in January 2021
OTHER TAXES – PRE-EXISTING LIABILITIES AND OTHER TAXES
Those businesses with pre-existing liabilities that remain outstanding or those with PAYE or Corporation tax payable now or in the next few months may also encounter difficulty in paying what is due to HMRC by the normal due date. In light of the current Coronavirus crisis, HMRC have set up a special Coronavirus Payment Helpline for concerned taxpayers to call to discuss their options and agree a Time to Pay Arrangement.
0800 024 1222 (Open Monday to Friday 8am to 4pm)
If you have liabilities falling due in the next few months and will struggle to fund these payments we would recommend that you contact HMRC on the special helpline in advance of the due date to request time to pay. As demand for the helpline will be high, particularly around key payment dates it is worth contacting HMRC in advance of the payment date to minimise waiting times.
HOW WE CAN HELP
If you are unsure of whether or not you should proceed and make a payment to HMRC in respect of VAT or Self Assessment over the coming months please contact us in advance for guidance as to whether the deferral arrangement is available to you. You can either contact your usual contact by phone or email or alternatively email our central mailbox
