COVID 19 crisis: Deferral of VAT payments for the year 2020

The UK government has keenly invested in helping all businesses tide over the crisis brought on by the COVID-19 virus. With the economic climate being one of the most affected facets of the country’s functioning, the administrative bodies are leaving no stone unturned in easing the process of tax payments and other compliance measures for all businesses in the UK.

One such pivotal measure is the deferral of VAT payments for the year 2020 to help with UK companies’ cash flow. As per the proposal by the government, VAT payments that were due before June 30th this year, can now be paid any time until 31st March 2021.  According to officials, the deferred VAT will not be liable for interest or penalties.

Are you a UK VAT-registered business? Do you have a VAT payment due between 20 March 2020 and 30 June 2020? Not to worry! You now have the option to:

  • Post-pone or defer the payment until later in the year
  • Go ahead and pay the VAT due as normal

This move by the HMRC is likely to benefit around 2 million VAT payers but will delay £30 billion in taxes for the government, considering all trading that was done before the crisis also accounts for this year’s tax liability.

Who is eligible for this UK VAT deferral?

All UK VAT registered businesses and agencies associated with them. HMRC, through the Non-Established Taxable Persons Unit (NETPU), has also indicated that this includes foreign (non-resident) businesses registered for VAT in the UK.

However, HMRC confirms that import VAT is still payable during the COVID-19 emergency. The 3-month payment deferral will not apply in this case.

Payers on Mini One-Stop-Shop MOSS returns are also not included in this scheme.

How to apply?
You do not need to tell HMRC that you are deferring your VAT payment and no special application is necessary. It is an automatic measure. Returns will still have to be filed on time and HMRC will go ahead and process VAT reclaims and refunds normally. If COVID-19 is the reason behind deferring your VAT payment, you must pay on or before 31 March 2021. No penalties and interest will be charged for the same.

An important point to note here, is that if you have given direct debit instructions to your bank, that may need to be cancelled depending on your payment ability.


If you choose to defer payment of VAT, you will need to contact your bank to cancel the mandate. Doing this before the direct debit is scheduled to be collected, is recommended.  Do also remember to reinstate their direct debit mandate once the deferral is over.


I’ve missed paying taxes. What do I do?

Getting in touch with HMRC immediately is the best way out. How to get in touch depends on what payment you missed.

If you cannot pay because of COVID-19, a helpline is available.

0800 024 1222
Opening times:
Monday to Friday: 8am to 4pm

If you’ve been sent a demand of payment like a tax bill, call the number furnished in the letter. It should lead you to the HMRC office in question.

Call the Payment Support Service if you have not received a bill or letter.

Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 4pm

For more information, contact the HMRC iXBRL Tagging Experts in UK, Contact DataTracks