Time To Pay PLUS – Addition measures allowing the deferral of VAT and Income Tax announced

In a measure to probably take the pressure off HMRC’s TTP teams, a new VAT and Income Tax deferral scheme was announced by Rishi Sunak. We understood that HMRC were agreeing nearly all Time To Pay requests so this announcement really just formalises the situation and with some clients reporting waiting times on the phone of around two hours it’s clear that the system was nearly breaking point.

VAT

Updated: We are now recommending that the Direct Debts relating to VAT that people might have set up are now cancelled. 

The scheme, open to all UK businesses and automatic so no application required, will allow the deferral of VAT payments from 20 March until 30 June 2020. This effectively covers a whole quarter of payments. VAT due on any periods ending on 29 February 2020 would have been due by 7 April which is within the deferral period. The key to watch for here is that for February stagger periods the May VAT liability will still be due on 7 July 2020.

Businesses have until the end of the 2020-2021 tax year so in theory 5 April 2021 to settle the deferred amounts accrued during this period.

If there is a downturn in trade, this would affect the next quarter’s VAT due anyway, and any repayments are being processed as normal.

Income Tax

The next announcement should really help the self-employed. Second Payments On Account (POA’s) were due on 31 July 2020. These are now also deferred until 31 January 2021 where the balancing payment for the tax year 5 April 2020 and first POA for the following year are due.

Again this is an automatic scheme open to all tax payers in Self-Assessment (SA). It will be important to get 5 April 2020 tax returns done quickly to establish the true liability so that cash flow planning can be done ahead of January 2021.

The .gov website says that no penalties or interest will be charged in the deferral period.