On 21st March, Chancellor Rishi Sunak announced that The Government will be supporting businesses by allowing them to defer VAT payments for three months.
The deferral will apply for payments that would normally arise from 20th March 2020 to 30th June 2020, for VAT periods ending February, March and April 2020.
Businesses will be given until April 2021 to pay any liabilities that have accumulated during the deferral period. No penalties or interest will be charged in the deferral period.
All UK VAT registered businesses will be eligible for the deferment and it will be applied automatically.
Importantly, HM Revenue and Customs will continue to pay VAT refunds as normal.
This unprecedented step represents a direct cash injection of £30 billion, equivalent to 1.5% of GDP.
What you should do now
The VAT payment holiday will be applied automatically with no application process required. However, you must still file your VAT return as normal as its just the payment that is deferred
As with many of the emergency coronavirus announcements, detailed rules on how this will work have not yet been provided and we will keep you updated of developments.