Back in March, it was announced that business owners would be allowed time to pay VAT liabilities due to Covid-19 and its negative impact on businesses. Business owners who chose to defer their VAT payment need to be aware that the deferment option will end on 30th June. If you pay your VAT by Direct Debit and cancelled it to facilitate the deferment, you must now ensure it is reinstated.
The VAT payment deferral means that all UK VAT-registered businesses have the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.
MJB Avanti Director, Victoria Sharp advises;
“We have already had the question raised, if my VAT period ends May with payment due 7th July, what is my position? Of course, this crosses the June 30th end date, and we can understand why this may be considered a blurred line. What this means for businesses is the following periods are covered by the ‘time to pay’ initiative;
- quarterly and monthly VAT returns’ payments for the periods ending in February, March and April
- payments on account due between 20 March 2020 and 30 June 2020
- annual accounting advance payments due between 20 March 2020 and 30 June 2020
In terms of VAT, the period ending May with payment due 7th July is not covered, and VAT registered businesses must ensure this deadline is met.
However, the Institute of Chartered accountants in England and Wales (ICAEW) is reminding businesses that they need to take steps to reinstate their direct debit mandates so that they are in place in time for payments due in July 2020 onwards. Any outstanding returns should be filed, and three working days should be allowed to pass before reinstating the direct debit mandate.
HMRC will issue guidance on the end of the VAT deferral period shortly but, direct debit mandates usually need to be set up three working days before a VAT return is filed.
HMRC has confirmed 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.
REMEMBER: You must register for VAT if your VAT taxable turnover goes over £85,000 (the ‘threshold‘), or you know that it will. Your VAT taxable turnover is the total of everything sold that is not VAT exempt.
If you need help or advice on VAT, MJB Avanti have got you covered, we can offer a VAT checking service or a comprehensive bookkeeping service. Give us a call to discuss your requirements (08000) 388 799
Source: 2020 Innovation