Reinstating VAT Direct Debits as deferral scheme ends

As part of HMRC’s response to the COVID-19 outbreak a range of business support packages were introduced, including an option for businesses to defer any VAT liabilities due for payment between 20 March and 30 June 2020 until 31 March 2021. This will have covered all VAT registered businesses with period end dates from 29 February 2020 up to 30 April 2020 and additionally, those paying by instalments in this time.

For many businesses, to take advantage of this deferral required the cancellation of their existing Direct Debit arrangement with HMRC.

As businesses start preparing VAT returns for periods ending 31 May 2020 and beyond, HMRC are reminding businesses who had cancelled Direct Debits previously to now reinstate them should they wish Direct Debits to recommence.

HMRC have confirmed that appropriate system changes have been made for businesses under MTD for VAT, so that any reinstated Direct Debits will not collect any arrears as a result of taking advantage of the deferral scheme but will only collect the latest VAT liabilities due. 

Businesses wanting to reinstate their Direct Debit with HMRC must do so via their Business Tax Account (under the new MTD for VAT arrangements, agents are unable to set up Direct Debits on behalf of clients) and will need to do so at least 3 working days before submission of their next VAT return.

Of course, there are alternative ways to pay VAT liabilities electronically with HMRC and should you be too late to reinstate your Direct Debit for your next return or would prefer to remain without a Direct Debit, a full range of payment options can be found HERE

The Direct Debit scheme continues to offer a small benefit in providing an additional 3 working days before payment is collected compared to all other electronic methods.

Should you have any questions on your VAT deferral status or payment options please contact me or your regular local Thomas Westcott contact.