Closing of the VAT Payment Holiday Window
The government's support over VAT is now coming to an end. MARTIN CULL from our audit department explains how to prepare for the months ahead.
The VAT Payment Holiday Window allowed VAT-registered businesses, with payments that fell between 20 March and 30 June 2020, to defer them to a later date with no interest or penalties being charged on the deferred figure.
On 30 June 2020, the VAT Holiday window will close, and from 01 July 2020, VAT-registered businesses are expected to return to a normal repayment schedule for submitted returns. This means that companies will have to:
- set-up any cancelled direct debits for HMRC to take payments again
- continue submitting VAT returns as normal
Any of the VAT payments that were deferred during this period will now become payable in full on, or before, 31 March 2021. The amount payable can be paid in part along with subsequent returns.
If businesses are still unable to pay their VAT returns due to the impact of Covid-19, a 'Time to Pay Agreement' may be an option from HMRC. This allows businesses extra time to pay what you can and avoid any surcharges on the agreement. You should contact the Payment Support Service (PSS) on 0300 200 3835 before the VAT is due and explain the reason you are unable to pay on time.
A Time to Pay Agreement will only be considered for a 'reasonable excuse'. HMRC has explicitly added to their guidance on late payments that the impact of Covid-19 will be considered as a reasonable excuse:
“HMRC will consider coronavirus as a reasonable excuse for missing some tax obligations (such as payments or filing dates). Explain how you were affected by coronavirus in your appeal. You must still make the return or payment as soon as you can”.
When requesting extra time to pay the VAT liability, it is important to consider how much time is actually needed to make the payment and whether it is possible to justify this, as HMRC has no fixed period when granting a Time to Pay Agreement.
If you are struggling to find the available cash to make your repayments on time, it may be prudent to seek help with cashflow forecasting, especially when planning ahead to pay the full deferred amount by March 2021. Page Kirk can help with forecasting the cash available to your business to make sure you meet all your payment deadlines and don't face unnecessary fines or interest charges.
Contact us on 0115 955 5500 or email enquiries@pagekirk.co.uk for more information on any of the issues discussed in this article.