One of the key measures introduced by the Government was the ability for businesses to now defer their Value Added Tax (VAT) payments for 3 months. Furthermore, for the self-employed Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
These new measures whilst helpful in premise, we have explored them further and given you details on how to go about actioning them for your business.
For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
All UK businesses are eligible.
This measure has been introduced as an automatic offer with no applications required. Your business will not be required to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. The Government will continue to pay VAT refunds and reclaims as normal.
Important: Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return.
As previously stated, the Income Tax Self-Assessment payment due on the 31 July 2020 will be deferred until the 31 January 2021.
If you are self-employed are eligible.
This is once again an automatic offer with no application necessary. No penalties or interest for late payment will be charged in the deferral period. HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities.
These measures are crucial for us all to be aware of and if applicable to you and your business, they can be crucial in helping your business survive and recover during this time.