VAT – a few updates – Even if your business is not VAT Registered

Making Tax Digital deadlines, VAT payments deferral scheme and digital links

Making Tax digital will be:

  • Extended to vat registered businesses with turnover below the £85,000 Vat threshold from April 2022.
  • Introduced for Income Tax Self-assessment for businesses and landlords with income over £10,000 from April 2023

Covid-19 VAT payments Deferral Scheme

As part of the Government’s response to COVID-19, businesses were given the option to defer their VAT payments between 20 March and 30 June.

In June HMRC wrote to businesses to remind them the deferral scheme was ending (on 30 June) and VAT returns with a payment due date after 30 June must now be paid as normal.

Businesses that have deferred payments, and who normally pay by direct debit, should now set up a new one via their Business Tax Account (BTA). Please allow 3 working days before payment is due for direct debits set up via a BTA.

You should check the email address is correct (or input a new email address). Email addresses are required as part of banking regulations – HMRC will not use the email address given here to contact clients unless it is about their direct debit.

HMRC’s Time To Pay is still available for businesses struggling to pay their tax bills. See the guidance on GOV.UK.

Any deferred payments should be paid in full on or before 31 March 2021.

Business can make ad hoc payments or additional payments with their subsequent VAT returns if they wish, to reduce the amount outstanding.

There is guidance on GOV.UK.

Digital Links Extension

HMRC have provided MTD businesses with more time to put in place digital links between all parts of their functional compatible software. It is important for businesses to note that despite this relaxation they still need to ensure they are keeping digital records, submitting VAT returns via an API enabled software and maintaining all digital links they currently have in place.

As a result of the Coronavirus (COVID-19) situation the “soft landing period” to implement digital links has been extended to 31 March 2021. Previously there were 2 start dates – from 1 April 2020, or 1 October 2020 for deferred businesses. Now all businesses will not be required to have digital links between software programs until their first VAT Return period starting on or after 1 April 2021.