As a result of the ongoing disruption caused by COVID-19 many businesses and individuals are facing significant cash flow difficulties. In light of this the UK Government has made specific announcements regarding the deferral of certain VAT and income tax payments and HMRC have also been allowing businesses impacted by COVID-19 to defer payment of other taxes under time to pay arrangements.

VAT

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

  • defer the payment until a later date
  • pay the VAT due as normal

It does not cover payments for VAT MOSS or import VAT.

HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.

If you choose to defer your VAT payment as a result of coronavirus (COVID-19), you must pay the VAT due on or before 31 March 2021. You do not need to tell HMRC that you are deferring your VAT payment.

Income Tax

The Government has confirmed that income tax payments due on 31 July 2020 (‘payments on account’) may be deferred until 31 January 2021 and HMRC will not automatically charge penalties or interest for late payment.

The deferment is optional. Those who are still able to make July payments are encouraged to behave as ‘good citizens’ and pay the tax they owe on time thereby helping the Government.

Other taxes including corporation tax and PAYE

Businesses facing difficulty making other tax payments may request a time to pay (TTP) arrangement with HMRC to defer payments which are due (or overdue).

Taxpayers with a Customer Compliance Manager (CCM) should contact their CCM in order to make such an arrangement. Other taxpayers should contact HMRC via the dedicated Coronavirus helpline on 0800 024 1222 to make a request.

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