Updates to Value Added Tax Aspects of UK Initiatives for Businesses Amid COVID-19

April 06, 2020

HM Revenue & Customs has made available further details to the UK government’s 20 March announcement on a series of initiatives, including a valued added tax deferral, to support British businesses in the face of the coronavirus (COVID-19) pandemic.

As the rules currently stand, any UK business is entitled to choose to defer most valued added tax (VAT) payments otherwise due between 20 March 2020 and 30 June 2020 (without interest or penalties), and does not need to notify HM Revenue & Customs (HMRC) of the choice to defer.

The deferral can cover normal monthly or quarter-end payments and payments on account, but the deferral option does not extend to import VAT, nor MOSS (mini one stop shop) payments. However, if the VAT was to be paid by direct debit, HMRC emphasises that the payer (and not HMRC) must cancel the direct debit, and reactivate it in time for the deferred payment. Alternatively, a business may also choose to pay the VAT as normal.

Any VAT that is deferred must be paid to HMRC on or before 31 March 2021. Further details on how to make such payment are still awaited. However, VAT returns must still be submitted on time, even where the payment of VAT is to be deferred.

Any VAT refund claims may still be made, even by a business that chooses to defer payment of VAT.

HMRC may continue to update its guidance, Deferral of VAT payments due to coronavirus (COVID-19), periodically.

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If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Kate Habershon
Neil McKnight
Grace Tan