As part of its temporary measures to combat the effects of the Corona Virus on business, HMRC has agreed to defer VAT tax payments to aid cash flow.
Know your rights to ensure you benefit:
All businesses that are registered for UK VAT have the option to defer VAT payments due between 20 March 2020 - 30 June 2020 until the following year being 21 March 2021. Any VAT payments due after 30 June 2020 have to be paid as normal, unless the government announces otherwise before then.
How to benefit:
You do not need to inform HMRC if you wish to defer payment. To benefit from the deferral, you simply do not make VAT payments during the period 20 March 2020 - 30 June 2020.
Do's and Don'ts:
- Remember you still must file your VAT return as usual. Failure to do so could result in penalties.
- If you chose to defer, ensure that you cancel your direct debit if you have one. Otherwise HMRC will continue to take payment out of your account as normal.
The VAT referral will be essential to some businesses very survival and give that much needed relief if sales are low. The deferral allows the VAT monies to be applied to other areas of the business as required. But businesses would be well advised to use the saving wisely. Above all, remember that this measure is only a deferral, meaning you still must pay your VAT due at a later date. Having the VAT monies in a businesses account can provide a vital margin of safety, but business owners should now look to plan ahead to ensure that they do not simply delay cash flow problems until a later stage when the VAT becomes payable.
..."remember that this measure is only a deferral, meaning you still must pay your VAT due at a later date."
This information is in no way to be taken as legal advice or tax advice. It is for information purposes only and is in no way to be relied upon. You should always seek the appropriate professional legal advice before attempting to act on any of the information given here.
t: +(0)151 294 4722