In this second of our reports in respect of the Government’s response to Covid 19, we look at the automatic deferral of tax payments to HMRC which will be of interest to all taxpayers.
Automatic Deferral of Tax Payments
The Government will support businesses by deferring certain tax payments due between now and the end of July this year.
No penalties or interest for late payment will be charged in the deferral period. Tax returns will still have to be made during the deferral period even though the tax liability will not be payable on its normal due date.
VAT:
For VAT, the deferral will apply for all payments due from 20 March 2020 until 30 June 2020. All UK businesses are eligible and the deferral will apply automatically with no application required.
Businesses will not need to make any VAT payment during this period and will be given until 31 March 2021 to pay any liabilities that have accumulated during the deferral period. Direct debits in favour of HMRC should be cancelled and once the deferral period is over, they should then be reinstated.
VAT refunds and reclaims will be paid by the Government as normal.
Income Tax:
For Self-Assessment, the second payment on account due for the tax year 2019/20, normally payable on 31 July 2020, will be deferred until 31 January 2021. This is an automatic deferral with no application required for any individual within Self-Assessment.
Comment
If you need help with your cash flow, this is a means of obtaining finance without being subject to the normal lending criteria and application process of banks and other providers of finance.
It should be remembered that this is only a deferral – the tax will still have to be paid, presently scheduled to be by 31 March 2021 at the latest.