Important VAT reminders

Countdown to the 31 January Self-Assessment Tax Return deadline begins

By Julian Borley, VAT Director at Milsted Langdon

There are two important upcoming VAT deadlines that businesses should be aware of.

End of VAT deferral period 

The deferral of VAT payments to support businesses affected by the Coronavirus crisis ended on 30 June. Payment will need to be made in respect of any VAT return with a due date after this time.

It is therefore important that those businesses that wish to pay by direct debit reinstate their mandates.

Under the deferral scheme, all UK VAT-registered businesses had the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.

VAT returns covering the period ending 31 May have a due date of 7 July and so any VAT due will therefore need to be paid by this date.

This means that businesses need to ensure direct debit mandates are in place in time for payments to begin again in July if that is their preferred method of payment.

It is worth noting that direct debit mandates usually need to be set up at least three working days before a VAT return is filed.

It is easiest for businesses to set up direct debit mandates through their business tax account.

HM Revenue & Custom (HMRC) has confirmed that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated and have amended their systems to avoid this happening for businesses subject to Making Tax Digital for VAT.

Arrangements will also need to be made in future to pay the deferred VAT by 31 March 2021. HMRC are likely to publish further guidance on the mechanisms needed to do this closer to the time.

If you are unable to pay your VAT payment which is due after 30 June 2020, it is recommended you contact HMRC to determine whether a payment arrangement can be put in place.

EU VAT refunds

VAT-registered businesses have until 30 September 2020 to claim a refund for VAT on goods and services that their business has incurred in a different EU country.

Many UK businesses incur VAT in the EU, but as this VAT cannot be claimed on a UK VAT return, businesses must seek to claim this through the EU VAT refund scheme.

The minimum amount a business can claim varies based on each EU country, but is generally:

  • €400 for claims of more than three months but less than a year
  • €50 for claims for a whole year or the period between your last claim and the end of the year.

The deadline for submitting EU refund claims is 30 September of the following year, meaning any EU VAT incurred in 2019 must be claimed by this date. Claims cannot cover more than a calendar year or less than three months unless that is all that is left of the calendar year. Businesses can, however, claim for items missed on earlier claims if they relate to VAT paid in the calendar year they are claiming for.

EU VAT can be reclaimed by using HMRC’s VAT online services as long as businesses are registered to do so. Generally, you are not required to send any paper invoices or other documents with a claim, but some countries do request scanned invoices over certain amounts. Therefore, businesses should keep all of the original invoices and other documents supporting a claim as they may be needed at a later date.

When a claim is submitted HMRC will it acknowledge it and provide a reference number, which should be retained for follow up queries.

If you require assistance with either of these VAT matters, please email VAT@milsted-langdon.co.uk.