UPDATE ON VAT & INCOME TAX DEFERRAL
Based on the briefing from ICAEW, we have updated the notes.
VAT
The deferral for VAT payments applies from 20 March 2020 until 30 June 2020. All VAT registered traders are eligible. This will generally mean the deferral of one quarter’s VAT, therefore quarterly payments that would have been due on 7 April, 7 May or 7 June 2020, or the monthly payments due on each of these dates (if you are on monthly payments), do not need to be paid.
The relief is automatic with no application to HMRC required.
We are waiting for confirmation as to whether HMRC automatically suspend collection of direct debit payments of VAT. If HMRC does not automatically suspend direct debit payments, businesses will need to cancel and then remember to set it up again in due course.
Businesses have until the end of the 31st March 2021 to pay the deferred VAT.
VAT returns showing an overpayment will be repaid as normal by HMRC.
Businesses should continue to file their VAT returns by the due date.
INCOME TAX
The deferral of Self-Assessment income tax applies to the second payment on account for 2019/20 due on 31 July 2020 which is deferred until 31 January 2021.
Eligibility is limited to the self-employed ONLY
We are awaiting clarification, but it is believed that the deferral applies to any taxpayer who was self-employed in the 2018/19 tax year on which the payment on account is based.
As with the VAT, the relief is automatic with no application to HMRC required.
Also, as with the VAT, those who pay by direct debit should consider cancelling the instruction with their bank.
Self-Assessment tax returns for 2019/20 should be filed no later than the 31st January 2021.
No penalties or interest for late payment will be charged in the deferral period.
