COVID-19: Firms that missed VAT deferral may be able to claim refund

3 June: Taxpayers that wanted to defer VAT payments, but failed to cancel their Direct Debits in time can claim a refund. HMRC outlines how a claim can be made to ICAEW’s Tax Faculty.

HMRC has confirmed that where taxpayers wanted to defer VAT payments due between 20 March 2020 and 30 June 2020, but did not manage to cancel their Direct Debit in time they can claim a refund.

The quickest way for taxpayers to do so, according to HMRC, is to submit a Direct Debit Indemnity Claim to their bank, ensuring that they state they want to claim a refund under the Direct Debit Indemnity Scheme (DDI). HMRC confirms that there is no time limit in making this request.

If the taxpayer wants a repayment from HMRC rather than contacting the bank, they must ensure that their bank details are updated using the online services.

HMRC reminds taxpayers that due to COVID-19 restrictions, Payable Orders are not being issued and that it may take up to 21 days for the refund to be received if the Direct Debit Indemnity Claim process is not used.

The Tax Faculty understands that HMRC will provide further guidance on the payment of the deferred amount at the end of the deferral period. Businesses will also need to make arrangements to pay VAT falling due from 1 July 2020 to 31 March 2021 (ie, amounts that are not deferred). The Faculty is awaiting confirmation that reinstating a Direct Debit will not result in the deferred VAT being collected immediately. A change in the way that HMRC collects Direct Debits for those in MTD for VAT makes this a possibility and HMRC needs to ensure that does not happen.