Did you defer your VAT payments? It’s time to reinstate your direct debits!

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The deferral of VAT payments due to coronavirus comes to an end on June 30 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 March 20 and June 30, 2020 until March 31, 2021.

It is now time for businesses to take steps to reinstate their direct debit mandates so that they are in place in time for payments due in July 2020 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 a VAT return is filed.

We cannot set up direct debit mandates on behalf of our clients; the business needs 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 systems change to avoid this happening for businesses in MTD for VAT.

For further information about this, or any other tax matter, contact our tax manager Nick Charnley on 01244 343504.