VAT PAYMENT DEFERRAL: IMPORTANT UPDATE ON DIRECT DEBIT PAYMENTS
HMRC updated its stance on VAT deferral on March 24, saying customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay – and do it in sufficient time so HMRC does not attempt to automatically collect on receipt of the VAT return.
It was originally thought that HMRC would simply not collect the direct debit. The situation has at least now been made clear.
Michael Ashdown, Harwood Hutton’s head of VAT, advises clients to file their VAT returns in the normal way and within the deadlines otherwise it will be treated as a default for surcharge purposes.
All UK businesses are entitled to defer any VAT payments that would otherwise be falling due between 20 March and 30 June 2020, meaning you will not need to make a VAT payment during this period. It has also been confirmed that non-UK businesses who are VAT-registered in the UK will be covered by the deferral.
This is an automatic offer with no applications required. Taxpayers will be given until 5 April 2021 to pay any liabilities that have accumulated during the deferral period. VAT refunds are not affected by this measure and liabilities falling outside of this window are due as normal.
In a further update on March 26, HMRC has said you do not need to tell them you are deferring payment and they will not charge interest or penalties on the deferred payment. Any deferred payment will need to be made by March 31, 2021, not April 5, 2021.
If you have any queries, please get in touch with your usual contact at Harwood Hutton.
I always get quick, clear and definitive responses from the Harwood Hutton tax team – commercial answers to commercial issues.Robin Berry – Morgan Management
Right from the outset Harwood Hutton gave us direction and great advice – and that advice has evolved over the years as we’ve grown. We’re both medium-sized companies providing a bespoke service – one furniture, one accountancy – and the relationship works.Andy McCarron, McCarron and Co
I’m deeply impressed with Harwood Hutton’s extensive knowledge of tax arrangements for residential and commercial property landlords.Qadeer Ahmed, MD, ABA Finance
They really took their time to understand what was important to us and our business and the expertise we required. Whoever we speak to at HH, we get the same fantastic response and technical input. It’s a real partnership.Edward Finch, group MD, MRIB insurance brokers
I have worked with the directors at Harwood Hutton on a number of mutual client matters over many years. The reassurance of their clear, commercial and focussed advice is one of the main reasons I regard this as one of my most valuable professional relationships.Frank Wessely, Partner, Quantuma LLP
Harwood Hutton never seem to rest on their laurels. They are always seeking out new avenues and ways to improve their offering. A very forward-thinking company with staff who are always well briefed and who approach each task with drive.Karl Austen, MD, Surefoot Communications
We have engaged Harwood Hutton in several areas of structuring, including VAT issues, decoupling an SPV from a group structure and HMRC clearance for a transaction. The team have exceeded all expectations by being proactive, measured and very thorough.Adam Fawsitt, Director, FHT Limited
We moved to Harwood Hutton as they delivered a succinct and professional proposal. If anything, we have been more impressed post-move. They are a fantastic company to work with. They do truly differentiate. They have the skills and capabilities of a mega firm but with a personal service.Edward Finch, group MD, MRIB insurance brokers
Join our mailing list to receive important news and insights for business leaders and private individuals