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Coronavirus VAT FAQs

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Sarah Baron - Menzies Accountant

Sarah Barron
VAT Specialist

DD: +44 (0)1489 566298

Sean Turner

Sean Turner
VAT Specialist

DD: +44 (0)207 465 1908

The spread of the Coronavirus (COVID-19) continues to dominate the news, with major implications for public health and the NHS. It is also causing economic disruption and the following FAQs content considers the impact of Coronavirus on VAT.

Further information is still to be released by the Government, but these FAQs have been updated for the additional information released to date.  In the absence of full detailed government advice, some of the following is expressed views and assumptions in some areas as indicated, so please take care.

Click the hot links below to jump to each FAQs section:

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VAT deferral

Do I need to apply to defer my VAT payment?

Added 21/04/2020

No – you do not need to ask permission or inform HMRC if you do not intend to pay VAT which is due between 20th March and 30th June 2020.

I have had a reminder from HMRC about a VAT payment due before 30 June, can I ignore it?

Added 30/04/2020

If the VAT payment qualifies for the deferral, you can ignore the reminder.

Do I need to show that I cannot pay my VAT?

Added 21/04/2020

There is no requirement for you to show hardship in paying your VAT before deferring this payment.

Will I be charged interest or penalties?

Added 21/04/2020

No interest or penalties should be levied on any amount deferred under this measure.

What about VAT MOSS returns?

Added 21/04/2020

These do not fall within the VAT deferral and must be paid as normal.

Do I have to submit my VAT return?

Added 21/04/2020

Yes. If you are unable to access data to prepare an accurate return, you can ask permission to submit an estimated return.

Can I pay my deferred VAT earlier than March 2021?

Added 14/05/2020

Yes, you should plan to settle the liability in full before 31 March 2021. Payments on account can be made. To minimise confusion for HMRC allocating payment, payments towards amounts deferred should be clearly referenced to the period of the original VAT return, ie 03/20 if you have deferred payment of a March 20 return.

I cancelled my direct debit for the March 2020 return, will it be reinstated for the June 2020 return?

Added 14/05/2020

You should check that the current payment method on your HMRC account is shown as direct debit and if not reinstate the arrangement well in advance of the due date to ensure the payment is taken on time.

Will the deferral be extended after the end of June?

Added 14/05/2020

We have had no indication yet that the deferral will be extended. Returns for quarters ended May and June 2020 will need to be paid on time.  If you will not be able to pay the next quarter, you should make a time to pay arrangement with HMRC before the payment due date to avoid surcharges. HMRC are likely to be taking an extremely high volume of calls, so acting early is recommended.

Can overseas traders defer their VAT payment?

Added 21/04/2020

Yes, the deferral is available to all UK VAT registered businesses.

If I defer my VAT payment, when do I need to settle the debt by?

Added 21/04/2020

VAT deferred will need to be paid by 31st March 2021.

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Import VAT and duty deferment – for 15 April payment only

Although the deadline has passed for this first deferment payment (April 2020), we are currently awaiting an update on the scheme for May 2020.

Do I need to apply to defer my import VAT and duty payment

Added 21/04/2020

Yes, HMRC must be contacted by telephone or email in order to make a request for deferment.

Do I need to show that I cannot pay?

Added 21/04/2020

Yes, you must be able to demonstrate that your business is experiencing severe financial difficulties.

Will I be charged interest or penalties?

Added 21/04/2020

No interest or penalties should be levied on any amount deferred under this measure.

Can overseas traders defer their payment?

Added 21/04/2020

This is unclear but, if a registered importer, deferral should be available.

Should I cancel my direct debit?

Added 21/04/2020

No, a direct debit should only be suspended, but not cancelled, if it was not possible to make contact with HMRC through the advertised channels.

What if my payment has been taken by direct debit already?

Added 21/04/2020

HMRC have said that it may be possible to have a payment credited and a time to pay arrangement discussed, although HMRC are currently working on the mechanics of this.

If I defer my VAT payment, when do I need to settle the debt by?

Added 21/04/2020

This must be discussed with HMRC on a case by case basis, when requesting deferral.

What about the payment due in May?

Update 13/05/2020

Importers continuing to face severe financial hardship, can contact HMRC for approval to arrange an extended period for full or partial payment of import VAT and duty due on 15 May, without the guarantee being called upon or authorisation withdrawn.

What if I already agreed a time to pay extension for April?

Added 13/05/2020

The Central Deferment Office should be emailed (cdoenquiries@hmrc.gov.uk) to confirm an extension is being requested for May, also indicating that your financial situation has not improved, or has worsened.

Can I continue to use my deferment account during any agreed time to pay arrangement period?

Added 13/05/2020

Yes, unless you default on an agreed payment in that period, in which case HMRC might consider suspending the account. 

Will my deferment limit be affected?

Added 13/05/2020

No, there is no need to increase the guarantee.

What if I use a freight forwarder’s deferment account?

Added 13/05/2020

HMRC can only agree extensions to the payment period with the account holder, but would expect this to be passed on to the importer, where the arrangement was agreed on the basis that the account holder was unable to secure payment from the importer.  You should contact your freight forwarder in this instance.

What about excise duty?

Added 13/05/2020

Separate arrangements are available for deferred excise payments, via the Covid-19 helpline (0800 024 1222).

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Import VAT and duty relief for medical supplies

Do I need to apply for this relief?

Added 21/04/2020

No, relief is immediate based on the goods being imported and their use.

What goods does this cover?

Added 21/04/2020

Goods distributed free of charge in relation to coronavirus, goods sold or donated to the NHS in relation to coronavirus and goods used for disaster relief agencies in relation to coronavirus.

What if the goods are later used for something else?

Added 21/04/2020

HMRC must be notified and import VAT and duty paid if used for something other than in relation to coronavirus.

How do I make the import declaration?

Added 21/04/2020

In CHIEF, CPC 40 00 C26 must be entered to box 37, document codes 9AID and/or 9AIV and status codes JP or UP in box 44.

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Customs authorisation changes

What has changed for my business?

Added 21/04/2020

If you operate or are applying for certain customs authorisations, the conditions of use and application process may change at HMRC’s discretion.

What authorisations does this affect?

Added 21/04/2020

Temporary storage, inward processing, customs warehousing, simplified declarations, guarantees and Authorised Economic Operator (AEO).

Do I need to contact HMRC?

Added 21/04/2020

Yes, permission must be obtained to temporarily vary conditions of an authorisation.

What might change?

Added 21/04/2020

Site opening hours, staffing, specific areas approved for customs control, throughput periods and temporary storage processing times.

How do I contact HMRC about a customs authorisation?

Added 21/04/2020

The supervising office must be emailed in the first instance.

What if I am about to apply for a customs authorisation?

Added 21/04/2020

Applications can be temporarily sent by email, but must be followed up with a signed hard copy at a later date.  Authorisations in relation to pharmaceuticals and food products will be fast-tracked.

What if my application has been submitted and I am awaiting a visit from HMRC?

Added 21/04/2020

Visits are currently not required, however, if it is deemed necessary, HMRC will be in contact to discuss suspending the process and next steps.

What if my authorisation is due to expire?

Added 21/04/2020

These should be automatically extended and HMRC will be in contact to notify that extension has been granted.

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