VAT Direct Debits

The deferral of VAT payments due to Coronavirus comes to an end on 30 June.

The VAT payment deferral enabled all UK VAT-registered businesses to have the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.

If you cancelled your direct debit, you need to take action to reinstate your direct debit mandate so that it is in place in time for payments due in July 2020 onwards.

To be effective, direct debit mandates usually need to be set up three working days before a VAT return is filed.

Agents cannot set up direct debit mandates on behalf of clients and therefore we are unable to do this for you. You need to set up the mandate through your business tax account. We are of course available to provide assistance if needed.

HMRC has confirmed to the Tax Faculty that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary systems change to avoid this happening for businesses in MTD for VAT.

Arrangements will also need to be made to pay the deferred VAT by 31 March 2021; further guidance is awaited from HMRC on the mechanism.

If you would like further guidance regarding any of the above then please get in touch.