Deferring VAT and Income Tax payments
Chancellor Rishi Sunak has announced the next quarter of VAT payments will be deferred until the end of June – a move he says will inject £30bn into UK businesses during the coronavirus crisis.
Making the announcement the Chancellor declared that the package aimed: “To help businesses pay people and keep them in work.”
The VAT deferral will apply from March 20 until June 30. Businesses will not need to make a payment during this period.
VAT-registered businesses and individuals will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.
VAT refunds and reclaims will be paid by the government as normal.
If you are self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. No penalties or interest for late payment will be charged in this period.
‘Time to Pay’ Scheme
HMRC has a set up a dedicated phone helpline to support businesses and self-employed people concerned about not being able to pay their tax bill due to coronavirus.
The government has also announced that during the outbreak the usual 3.5 per cent annual interest on deferred tax payments will be waived.
It is among a package of measures introduced in a bid to support businesses struggling to cope with the impact of the pandemic.
HMRC says the new hotline is a way for any business or self-employed individual concerned about paying their tax as a result of the crisis to get practical help and advice.
HMRC has drafted in up to 2,000 “experienced call handlers” who it says are available to support businesses and individuals when needed.
For those who are unable to pay their bill due to coronavirus, the taxman will discuss their specific circumstances to explore:
• Agreeing an instalment arrangement
• Suspending debt collection proceedings
• Cancelling penalties and interest where there are administrative difficulties contacting or paying HMRC immediately
HMRC says that each case will be negotiated on an individual basis, with bespoke Time to Pay arrangements. The helpline number is 0800 0159 559.
It is critically important that businesses that are facing these difficulties address the situation as soon as they can.
In most case, when it comes to Time to Pay the business involved will need to put its repayment offer in writing and produce information on its cash flow. Getting that negotiation right is also important.