Businesses urged to reinstate VAT direct debits

18 Jun

Business have been reminded to reinstate their direct debit mandates before the deferral of VAT payments due to the coronavirus (COVID-19) comes to an end on 30 June.

The VAT payment deferral means that all UK VAT-registered businesses have the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.

However, businesses need to take steps to reinstate their direct debit mandates so that they are in place in time for payments due from July 2020 onwards. Any outstanding returns should be filed and three working days should be allowed to elapse before reinstating the direct debit mandate.

The Tax Faculty at the Institute of Chartered Accountants in England and Wales (ICAEW) said: 'HMRC has confirmed to the Tax Faculty that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary systems change to avoid this happening for businesses in Making Tax Digital for VAT (MTD for VAT).

'Arrangements will also need to be made to pay the deferred VAT by 31 March 2021; further guidance is awaited from HMRC on the mechanism.'

acca logo

CHARTERED CERTIFIED ACCOUNTANTS

We are registered as auditors and regulated for a range of investment business activities in the United Kingdom by the Association of Chartered Certified Accountants – the global body for professional accountants.

NEWSWIRE

Register to receive our monthly Newswire once a month and we'll send you an email packed full of essential business news and handy tax tips to help save you money.

REGISTER NOW