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Newsletter issue - June 2020.
To help ease the financial impact of the coronavirus (COVID-19), the Government has announced that self-employed taxpayers may be able to defer some tax payments without paying a penalty. At present it is possible to:
- delay VAT payments due before 30 June 2020 until 31 March 2021;
- delay self-assessment payments on account due in July 2020 until 31 January 2021.
Taxpayers have the option to defer their second payment on account for the 2019/20 tax year if they are registered in the UK for self-assessment and finding it difficult to make a second payment by 31 July 2020, due to the impact of coronavirus.
HMRC will not charge interest or penalties on any amount of the deferred payment on account, provided it is paid on or before 31 January 2021.
Taxpayers do not need to tell HMRC that they are deferring the payment on account, and choosing to defer will not prevent them from being entitled to other coronavirus support that HMRC provide, such as grants under the Self-Employment Income Support Scheme (SEISS).
The second payment on account must be made on or before 31 January 2021 if people choose to defer and there is concern around the tax and accountancy professions that deferment may have a knock-on 'snowball effect'. Whilst deferral will give an element of 'breathing space' in the short term, it may store up bigger problems in the future if liabilities continue to remain unpaid. HMRC confirm that the usual interest, penalties and debt collection procedures will apply to missed payments.
Taxpayers should note that other payments which may need to be paid by 31 January 2021 include any balancing payment due for the 2019/20 tax year, and first payment on account due for the 2020/21 tax year. For further information on payments, taxpayers can sign in to their HMRC online account.
