VAT – Update on time to Pay Arrangements

The UK Government has pledged to support businesses throughout the period that the Coronavirus is impacting the economy.

It is equally important that you do all you can to protect your business from a potential cashflow crisis resulting from loss of business or difficulty in obtaining payment from your customers.  This measure looks at delaying payment of your VAT liabilities to HMRC.

DO NOT simply not file the VAT Return or file it “at the last minute”.  We suggest that it is completed and filed as soon as possible.

Firstly, if you currently pay your VAT liability by DD, you will need to contact your bank to:

  1. Instruct them to withhold the next DD to HMRC (usually 1 month + 7 days following the end of the VAT period) or
  2. Cancel the DD completely.

Your accounting software used to file VAT returns may also have a tick box instruction to pay by DD, which should also be removed.

Option b) would mean that a new DD instruction would need to be set up once finances are back on an even keel. Option a) would need to be repeated each time a VAT payment is due, if necessary.

HMRC have now engaged in providing time to pay arrangements and this advice relates to using this facility in respect of your VAT liabilities.  The telephone number to call is: 0800 0159 559

HMRC will only discuss the options available to you once the VAT return is filed, so it is important that this is done as soon as possible.

You will need to answer a few basic security questions and it would be useful to have available:

  • Your VAT registration number
  • Address, where the registration is valid
  • The amount in box 5 (the liability) shown on your last filed return
  • Date of registration

HMRC are tasked with providing all assistance necessary and will present two options to you; those will be:

  1. To defer the VAT payment for 3 months, or
  2. To enter into a payment plan to pay regular DD’s (weekly, fortnightly, or monthly)

If you choose option a) to defer, it appears that you can then ask later to enter into a payment plan to settle that deferred payment.

The phone lines appear to be well manned, but you could expect a minimum of a 30 minute wait before the call is answered.  We expect this time to increase nearer to the payment deadline date.

If we are your registered agent dealing specifically with your VAT affairs, we will be able to help by dealing directly with HMRC on your behalf.

We hope that you find this information useful, please do let us know if we can assist in any way.