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FAQ's - VAT Returns

24 March 2020

COVID-19

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We have included below some frequently asked questions for VAT.

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 can be made as late as 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 it will be extended.

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 part of the VAT deferral scheme explained above.  Once the amount due is known, after the end of March, call the HMRC Time to Pay team and seek a payment plan.

Q. We are due to pay excise duty on wines and spirits on 29 March 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 0800 015 9559 or 0300 200 3835.  Initially at the start of the covid-19 pandemic, HMRC refused to defer 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.

If you have any questions, please don't hesitate to contact one of our team or your ususal James Cowper Kreston contact.