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Business Tax  •  Coronavirus Advice  •  VAT

VAT payment holiday window ends on 30 June 2020

By RJP LLP on 26 June 2020

The VAT payment holiday which was announced in Rishi Sunak’s speech on 20 March 2020 will be ending on 30 June 2020. Normal service for VAT resumes from 1 July 2020 and therefore any businesses who are filing a May 2020 VAT return will need to either pay the VAT due by 7 July 2020 or put in place a time to pay arrangement.

HMRC has said it will be sympathetic towards businesses that cannot pay by 7 July due to Covid-19. If you need to negotiate a Time to Pay arrangement, here is some advice on how to go about it.

Contacting the Payment Support Service (PSS)

It is important to make contact with the PSS at HMRC before the VAT return is due to be filed. Doing this means that any time to pay agreements agreed will not be subject to a default surcharge.

When you call the PSS make sure you have your business’ VAT number and bank account details to hand. You will need to be clear about the amount of VAT that is outstanding and your proposals to settle the arrears.

The HMRC officer will require details about why you cannot pay on time. We advise to and try and pay some of the VAT due as a partial payment on or before 7 July 2020 to get a better outcome.

When speaking to HMRC it is tempting to simply ask what the maximum time to pay arrangement could be. There is no fixed “going rate” period that HMRC allows.  It is far better to establish what you can pay by when and present this proposal to them with a justification.

Coronavirus disruption affecting cashflow or expenditure incurred to prepare for social distancing measures are likely to be some of the reasons why businesses are unable to pay their VAT.

Ensure that you reactivate the direct debit mandate if you delayed the previous quarter’s VAT return. Also note that cashflow projections should include the 31 March 2021 deadline for settling the VAT deferred during the payment holiday window.

To get in touch with the PSS, call 0300-200-3835. Lines are open 8am to 4pm, Monday to Friday.

If you would like help with your VAT return or further advice on PSS contact partners@rjp.co.uk 

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31 January 2021 - Submit your self assessment tax return and pay tax due

Don’t forget the deadline for sending in your self assessment tax return and making tax payments. You may be able to agree a Time to Pay schedule with HMRC depending on your circumstances and pay in instalments. Talk to us and we can help you prepare your tax return and advise you on the best options for deferred payments.