What is the Coronavirus VAT deferment?

Written by: Keith Tully

Published: 31st March 2020

A financial sheet and pound coinsAs a coronavirus relief measure for businesses, HMRC has temporarily deferred VAT payments to assist with cash flow for payments due between 20 March 2020 and 30 June 2020. If you’re a UK registered VAT business, you can automatically benefit from the three month VAT deferment until June 30, giving you the breathing space to focus on keeping your business afloat during the volatile economic circumstances surrounding the coronavirus outbreak.

The measure, as announced by Chancellor of the Exchequer, Rishi Sunak, provides a £30bn line of credit to over two million businesses in the UK. As the self-employed workforce and SMEs fight to stay above the tide during these uncertain trading conditions as a result of coronavirus, the number one priority is maintaining cash flow to keep up with the ongoing challenges posed by the virus.

If you choose to take the route of deferring your VAT payment, you must pay VAT due by the end of the 2020/21 financial year, which is 31 March 2021 for monthly VAT payers.

If you are making payments through direct debit, your upcoming VAT payment will automatically be deducted from your account. You will need to manually cancel your direct debit to benefit from the deferment. If you pay on a term by term basis, you will not need to inform HMRC of your intention to benefit from the deferment.

HMRC will not charge interest or incur penalties on the amount deferred as a result of the coronavirus business support measure. This will not affect your VAT returns, these will need to be submitted on time and HMRC will process VAT reclaims and refunds as usual during the period of VAT deferment.

Mini One Stop Shop (MOSS) - The deferment does not apply to businesses using the Mini One Stop Shop. This is the VAT scheme for businesses liable for VAT in several countries due to the provision of services to countries in the European Union. The scheme simplifies the process by allowing you to pay VAT to HMRC rather than registering in every country until the end of the Brexit transition period.

MTD for VAT, Phase 2 delayed – The second phase for Making Tax Digital has been delayed until 1 April 2021, however, VAT returns should be submitted on time. This measure was due to affect 1 million businesses in the 2020-2021 financial year, changing the way VAT returns are processed. Phase 2 consists of penalties for non-compliance and tightening up the link between accounting software and HMRC. This eases the pressure off businesses, helping them redirect focus on maintaining cash flow and retain staff during the COVID-19 outbreak .

Time to Pay Arrangement Scheme - If you have difficulty making VAT payments on a long term basis and see no repayment prospects, request a Time to Pay Arrangement. If approved, HMRC will restructure your VAT payments into affordable instalments.

  • Negotiating with HMRC for 35 Years
  • 1000’s Successful TTP Arrangements
  • Full Support from Start to Finish
Visit Time To Pay Experts
Expert HMRC Time To Pay Support
60 Second Online Assessment Available

The coronavirus VAT deferment follows suit to a comprehensive list of business support measures announced by Chancellor Rishi Sunak to help SMEs cope with the intense pressure posed by COVID-19 which continues to grind businesses to a halt.

Keith Tully

Keith Tully

Join Keith Tully on Linked In Follow Keith Tully on Twitter

Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

Meet our Team of Experts
Director Support - Business suffering from Cash-Flow Problems?
If your company is financially distressed, we also offer the below services:
Business debt recovery

  • Recover Unpaid Invoices of £5k+
  • Expert Credit Control Services
  • Stop Late Payers & Bad Debts
Visit Site
Time to pay experts

  • Get Breathing Space with HMRC
  • Support with Business Tax Arrears
  • 35 Years HMRC Negotiation
Visit Site
UK Business Finance

  • Rejected for a CBILS Loan?
  • Get Emergency Business Funding
  • Supporting 1000+ UK Companies
Visit Site
Who we help
  • Company Directors
  • Finance Directors
  • Sole Traders
  • Accountants
  • Small Businesses
  • Large Businesses
  • Partnerships
Contact our team
Jonathan Munnery
Gillian Sayburn
Julie Palmer
or Find your Nearest Office

Here at Real Business Rescue we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY

Business Rescue Advice for Directors
Free Guide for Limited Company Directors
Business Rescue Advice for Directors
  • How to manage company cash flow problems
  • Advice on dealing with HMRC
  • Understanding rescue and closure options
  • And much more...
Free Guide Download
Dealing with your Insolvent Clients
Business Rescue Guide for Accountants
Dealing with your Insolvent Clients
  • Helping you advise insolvent clients
  • Spotting signs of client distress
  • Exploring business rescue options
  • And much more...
Free Guide Download
Our numbers speak for themselves
Number of UK Offices
Directors Helped
Licensed Insolvency Practitioners

This site uses cookies to monitor site performance and provide a more responsive and personalised experience. You must agree to our use of certain cookies. For more information on how we use and manage cookies please read our PRIVACY POLICY