COVID-19 VAT payment deferral measures for VAT registered businesses.

At a glance

  • VAT registered businesses were not required to make VAT payments that were due from 20 March 2020 to 30 June 2020.
    • This relief was automatic: it did not need to be claimed.
  • The VAT liability and payment were not cancelled, they were deferred.
  • VAT refunds and reclaims were not affected.
  • This deferral measure applied to VAT payments due for the VAT quarters:
    • 29 February 2020: normal payment deadline 7 April.
    • 31 March 2020: normal payment deadline 7 May.
    • 30 April 2020: normal payment deadline 7 June.
  • Where VAT was paid by direct debit it was necessary for businesses to cancel the direct debit with their bank, if they wished to defer payment.
    • HMRC confirmed that a refund could be claimed where a business failed to cancel their direct debit in time and that the quickest way to do this was to submit a direct debit indemnity claim to their bank. Alternatively, a refund could be claimed from HMRC but this may take longer. Source: ICAEW
  • Businesses must remember to reinstate their direct debits in time for their first payment due date after 30 June 2020. See Reminder: Reinstate your direct debits for VAT
  • Any deferred VAT liability needed to be settled by 31 March 2021 unless the payment scheme was used.
    • Under the payment scheme, the balance could be paid by up to eleven interest-free instalments by the end of March 2022. See Overview tab. 
  • Penalties will be charged where the payment scheme has not been joined or alternative arrangements made to pay the deferred VAT by 30 June 2021. 

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