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Coronavirus - Tax Q&A

17 April 2020

COVID-19

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Many businesses are facing financial hardship as a result of the current Coronavirus pandemic and paying current and future tax liabilities will be a real concern to many. What help and how to get it depends on the liability that is due.

VAT, Excise Duty, Import VAT and MOSS

Q. Do we have to pay our next VAT return?

A. HMRC announced an automatic deferral of payment for the next quarterly return either 02/20, 03/20 or 04/20.  Payment will be due by 31 March 2021.

Q. Do we have to apply for this VAT return deferral?

A. No, it is automatic

Q. Does the non-payment count as a default?

A. No, so no Default Surcharge or interest is charged.

Q. We are a large VAT payer, so pay monthly Payments on Account.  Do these POA payments fall within the scope of the VAT deferral?

A. Yes, all payments (regular monthly and balancing payments) due between the dates 20 March to 30 June are within the automatic deferral.  Remember to cancel any Direct Debits if you make payments using this system. 

Q. Is the VAT return deferral scheme likely to be extended to the next quarterly return?

A. It is not clear, but if the situation is unchanged, we expect that businesses will encourage the government to extend the deferral.

Q. Should we continue to submit VAT returns, or can we stop?

A. Continue to submit returns on time.

Q. Can we submit a VAT return excluding the output tax on sales, leaving the input tax on purchases and expenses?

A. No, this submitted return would be inaccurate and could attract penalties.

Q. We owe HMRC VAT amounts from earlier returns.  Will HMRC continue to attempt to collect these monies?

A. Yes, unless you contact the VAT Time to Pay team and request a payment plan or an amendment to an existing payment plan.

Q. Our next return is a repayment, with HMRC owing us money.  Will they repay it to us?

A. Yes. Repayment returns are sometimes checked by HMRC before the repayment is released;  these enquiries will continue.

Q. We are due to pay March import VAT on our deferment account on 15 April.   Can this payment be delayed?

A. Import VAT is not currently part of the VAT deferral scheme explained above.  HMRC have advised that they are currently seeking advice from HM-Treasury whether they are able to allow importers to suspend payment of import VAT. We will issue an update when HMRC make this decision.

Q. We are due to pay excise duty on wines and spirits removed from a duty free warehouse to UK domestic use, from our monthly deferment account.  Can we delay paying this excise duty?

A. You will have to negotiate a Time to Pay agreement individually with HMRC, by calling the Business Payments Support Service on 0300 200 3835 or the Covid-19 helpline on 0800 015 1222.  At the start of the covid-19 pandemic, HMRC refused to suspend excise duty, but the Wine & Spirits trade association contacted HM-Treasury, who confirmed that excise duty should be capable of deferral, and have instructed HMRC, so that new applications for time to pay are likely to be successful. HMRC have advised that the payment of one particular excise duty, beer duty for UK breweries, cannot be suspended and must be paid.

Q. We are due to pay our quarterly VAT MOSS return for 03/20 on 20 April.  Is this payment automatically deferred?

A. No, MOSS payments are not part of the automatic VAT deferral scheme.  You should contact HMRC and ask for a Time to Pay arrangement.

 

Income tax

Q. Do I have to pay my tax bill due 31 July 2020?

A. No. All taxpayers can benefit from the opportunity to defer their July tax bill until January 2021.

Q. Will I be charged interest?

A. No. There will be no penalties or interest for late payment as long as the tax that is deferred is paid by 31 January 2021.

Q. Do I have to make a claim in order for deferral to apply?

A. No. There deferral will be automatic and no claim will be necessary.

Q. I pay my tax by direct debit. Will payment be automatically collected?  

A. Yes. If you have set up a direct debit mandate you should contact your bank to cancel this.

Q. As a result of Coronavirus, my income in 2019/20 is lower than I was expecting. What can I do?

A. If this applies you should review your tax position. Depending on your circumstances it may be possible to request a refund of some tax already paid and therefore assist with cashflow.

Q. I would rather pay my tax bill in July if at all possible. Can I still do this?

A. Yes. If you would prefer to make the payment then you can still do so.

 

Capital gains tax

Q. Are there any changes to capital gains tax?

A. At present, there is no deferment of capital gains tax available.

 

PAYE

Q. I cannot pay the PAYE that is due. What do I do?

A. You will need phone the helpline on 0800 024 1222. Lines are open Monday to Friday from 8am to 4pm. You can also speak to an adviser online via HMRC’s webchat. You can access this here.  

 

Corporation tax

Q. I cannot pay my company’s corporation tax due.  What do I do?

A. Again you need to phone the helpline on 0800 024 1222 or use HMRC’s webchat service to agree a time to pay arrangement.

Q. What preparation do I need to do before calling the helpline?

A. There is no specific preparation required although you should have a proposal for what you can pay and when. The helplines are extremely busy and it will take time to get through. The best advice is to be patient and keep trying.

Q. What kind of response can I expect?

A. Generally the feedback from clients has been positive with HMRC agreeing to sensible deferral proposals. In fact some have commented that it was easier than they were expecting! If you are worried about meeting payment deadlines you should contact HMRC as soon as possible.

 

For more information, please contact us