For those clients who are VAT Registered please note that the VAT deferral payment holiday window ends on 30 June 2020, and normal service resumes from 1 July. If you have cancelled your VAT Direct Debit then you need to reinstate this towards the end of June 2020 to ensure that the 7 July payment is made.
If you cannot pay the VAT due by 7 July, for the May VAT return because of the impact Covid-19 has had on your trading position, then HMRC will have a sympathetic ear and time to pay agreements may be available.
Payment Support Service (PSS)
If you are unable to pay your VAT Liability – your priority is to contact the PSS at HMRC before the VAT is legally due for payment. Any time to pay agreement will not then be subject to a default surcharge.
Before you call the PSS, make sure you have your VAT number and bank account details to hand. Also be clear about the amount of VAT that is outstanding and your proposals to settle the arrears. You will need to establish how much you can afford to pay and when, then justify that time period to HMRC, there is no fixed ‘going rate’ that HMRC allows and they are very sympathetic at the moment. Please bear in mind that if you have deferred the previous VAT period you will also need to include this value in the time to pay proposal.
The HMRC officer you speak to will also require details about why you cannot pay on time. A partial payment on time will score ‘brownie points’, rather than asking for all of the liability to be deferred.
Contact details for the PSS is 0300-200-3835, they are open 8am to 4pm Monday to Friday.
Reasonable excuse
The concept of reasonable excuse has always been a key part of the VAT system. It has been the subject of many tribunal hearings over the years because ‘reasonable excuse’ is not clearly defined in law. In the VAT world, it is relevant when a business has missed a deadline, eg filing a return, registering for VAT on time, paying tax or replying to an information notice.
The HMRC guidance on reasonable excuse now includes a paragraph that is specific to the impact of the virus: “HMRC will consider coronavirus as a reasonable excuse for missing some tax obligations (such as payments or filing dates). Explain how you were affected by coronavirus in your appeal. You must still make the return or payment as soon as you can”.
More good news to that information is that taxpayers notified of any HMRC decision that is dated February 2020 or later will be given an extra three months to appeal the decision if they think it is wrong.
This appeal extension recognises that many businesses might not have been able to appeal while key staff were working remotely.
