Cash flow assistance
VAT payments for the next quarter (i.e. the period from 20 March to 30 June 2020) will be deferred. Taxpayers will have until the end of the tax year 2020/21 to pay any VAT liabilities that accumulate over the deferral period. Vat refunds and reclaims will be paid by HMRC as normal. Note that businesses need to cancel their direct debits to avail of HMRC’s VAT deferral. If direct debits aren’t cancelled, VAT is very likely to be collected as normal. All businesses qualify for the deferral, no application is required.
Deferring Self-Assessment payments on account
Income Tax Self-Assessment, payments due on the 31 July 2020 can be deferred until the 31 January 2021. You do not need to be self-employed to be eligible for the deferment. No application is required and no penalties or interest for late payment will be charged in the deferral period.
Time to pay (tax)
HMRC has scaled up its “time to pay” service to help businesses concerned about paying their tax due to coronavirus. Up to 2,000 experienced call handlers are available to agree arrangements on a case-by-case basis tailored to individual needs and circumstances to include:
agreeing an instalment arrangement; and
suspending debt collection proceedings.
cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately
The number to ring is 0800 0159 559.
Self-employed specific measures
Besides the deferral of tax payable in July to January, HMRC has also commented on SSP, UC and ESA as follows:
“If you are not eligible for SSP – for example if you are self-employed or earning below the Lower Earnings Limit of £118 per week – and you have COVID-19 or are advised to stay at home, you can now more easily make a claim for Universal Credit or new style Employment and Support Allowance. If you are eligible for new style Employment and Support Allowance, it will now be payable from day 1 of sickness, rather than day 8, if you have COVID-19 or are advised to stay at home”. In effect, this means the minimum income floor for access to universal credit has been suspended for self-employed people affected by the economic impact of coronavirus.
These are very welcome – and necessary – measures. The extension in time to pay VAT and income tax liabilities represent interest free loans from the Government. As regards “Time to pay” this is not new, but it is good to see it being scaled up. Our clients’ experience here has generally been good; HMRC normally takes a sympathetic and programmatic approach to instalment payment requests.
Whilst the improvements to SSP, UC and ESA are to be applauded, these benefits are much less than grants receivable by employees under the Coronavirus Job Retention Scheme and by the self-employed under the Self-Employed Income Support Scheme.