If, due to COVID-19, businesses could not afford to pay their VAT, HMRC offered a deferral without interest or penalties, meaning although the VAT return still needed to be filed, any VAT due for payment between 20 March 2020 and 30 June 2020 could be deferred until 31 March 2021. To do this, any business who had a Direct Debit set up to automatically pay their VAT was advised to cancel the mandate and then reinstate it at a later date.
Just a quick reminder that the option to defer paying VAT ends on 30 June 2020. If your VAT payment due date is on or after 1 July 2020, it must now be paid on time and in full, so if you cancelled your VAT Direct Debit mandate you’ll need to set it up again (make sure you do this at least 3 days prior to submitting your VAT return so that HMRC can collect the Direct Debit).
Don’t forget to make a diary note to pay any VAT you have deferred by 31 March 2021. If you want to spread the cost of your deferred VAT, HMRC will accept adhoc and/or additional payments.
If you need more time to pay the deferred VAT, you can contact HMRC via www.gov.uk by searching for ‘If you cannot pay your tax bill on time’ or by calling 0300 200 3835 (if you ring, quote ‘V1’) before the payment is due.
When you pay your VAT to HMRC, you should enter the bank payment with a T9 (outside the scope) tax code in Sage.
For more Sage tax code guidance, download our free Sage Tax Codes Guide.