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Businesses Need To Reinstate VAT Direct Debits

Posted: 23rd Jun 2020 by Clair Watmore Coronavirus, Taxation

The deferral of VAT payments due to Coronavirus will end on 30th June and businesses need to take action to reinstate their direct debit mandates. 

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

HMRC will issue guidance on the end of the VAT deferral period very soon but to be effective, direct debit mandates usually need to be set up three working days before filing a VAT return. 

We cannot set up direct debit mandates on behalf of our clients so it’s important businesses understand that they need to set up the mandate through their business tax account. 

HMRC has confirmed that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary system changes to avoid this happening for businesses in MTD for VAT. 

For further information, visit https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19