--- title: "HMRC offer option to defer VAT payments" url: https://taxdisputes.co.uk/2020/06/hmrc-option-defer-vat-payments-deferral-period-legal-advice/ date: 2020-06-12 modified: 2026-06-02 author: "Annabel Clarke" description: "HMRC published guidance on 26 March 2020 offering UK VAT businesses the option to defer VAT payments falling due between 20 March 2020 and 30 June 2020 until 31 March..." categories: - "Coronavirus" - "COVID-19" - "HMRC" - "Value Added Tax" tags: - "Coronavirus" - "Covid-" - "COVID-19" - "HMRC" - "hmrc penalty" - "HMRC Policy" - "HMRC Tax Disputes" - "Tax Appeal" - "tax return" - "VAT" - "VAT dispute" image: https://taxdisputes.co.uk/wp-content/uploads/2020/06/hmrc-lexlaw-solicitors-london-COVID-19-coronavirus-tax-VAT-return-deferral-lawyers.jpg word_count: 757 --- # HMRC offer option to defer VAT payments [HMRC ](https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19)published guidance on 26 March 2020 offering [UK VAT](https://taxdisputes.co.uk/hmrc-vat-investigations-evasion-input-ouput-double-taxation-tribunal-legal-advice/) businesses the option to defer VAT payments falling due between 20 March 2020 and 30 June 2020 until 31 March 2021. [HMRC ](https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19)have brought the measure in to [support businesses ](https://lexlaw.co.uk/corona-coronavirus-covid-19-legal-litigation-insolvency-tax-employment-dispute-advice/)who have struggled with the impact of [COVID-19](https://www.gov.uk/coronavirus/business-support).  [HMRC ](https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19)have also agreed not to charge interest or penalties on any deferred [VAT payments](https://taxdisputes.co.uk/hmrc-vat-investigations-evasion-input-ouput-double-taxation-tribunal-legal-advice/). [HMRC ](https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19)have also agreed that businesses who wish to defer their payments however, were unable to cancel their direct debit in time are now able to [claim ](https://lexlaw.co.uk/corona-coronavirus-covid-19-legal-litigation-insolvency-tax-employment-dispute-advice/)a refund. ## What VAT payments can be deferred?  You are only able to defer:  - Quarterly and monthly VAT returns’ payments for the periods ending in February, March and April. - Payments on account due between 20 March 2020 and 30 June 2020. - Annual accounting advance payments due between 20 March 2020 and 30 June 2020. [VAT payments](https://taxdisputes.co.uk/hmrc-vat-investigations-evasion-input-ouput-double-taxation-tribunal-legal-advice/) that are due after the end of the deferral period will need to be paid as normal.  ## How can businesses obtain a refund on their VAT payments? There are two possible methods available for businesses to obtain a refund: - **Indemnity claim via your bank - **this method is the quickest way to receive a refund. Businesses have been encouraged to contact their bank for details of the relevant procedure to follow to make a direct debit indemnity claim as the procedure may vary between each bank. - **Repayment from HMRC - **another method is to contact HMRC directly through the coronavirus helpline. Businesses should ensure that their bank details are updated using their online service. Due to COVID-19 businesses should also be aware that it may take up to 21 days to receive the refund.  Businesses who think they will struggle to repay the deferred VAT at the end of the deferral period should get into contact with [HMRC ](https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19)as soon as possible to explore the possibilities of agreeing a time to pay the arrangement. ## What can I claim VAT back on? You can only claim back [VAT ](https://www.gov.uk/vat-rates)on services and goods that are used wholly and exclusively for your business, this could include: office supplies, transport costs and services such as accountancy as they are all used solely for the purpose of the business. If a supplier does not give you back a valid [VAT ](https://www.gov.uk/vat-rates)invoice then in the majority of cases you will not be able to claim [VAT](https://www.gov.uk/vat-rates) back.  If a service or good is used partially for the business and partially for home use, you may also still claim back a proportion of the [VAT ](https://www.gov.uk/vat-rates)that is equal to the amount used by your business. An example of this could be home broadband.  If you raise an invoice and pay [VAT ](https://www.gov.uk/vat-rates)on the expected income however the invoice is not paid by a customer, this is considered bad debt. The [VAT ](https://www.gov.uk/vat-rates)that has been paid on the invoice can then be claimed back from [HMRC ](https://www.gov.uk/government/organisations/hm-revenue-customs)on your next return. Furthermore if the customer then later does pay the invoice the [VAT ](https://www.gov.uk/vat-rates)can then be repaid then.  ## How is VAT recovered? A [VAT](https://www.gov.uk/vat-rates)–registered business has the right to recover the [VAT ](https://www.gov.uk/vat-rates)charged and therefore the recovery can be exercised before a supplier has been paid for the supply in question.  To recover the [VAT ](https://www.gov.uk/vat-rates)a [VAT](https://www.gov.uk/vat-rates)-registered business must complete a [VAT ](https://www.gov.uk/vat-rates)return for the period that is in question. [VAT ](https://www.gov.uk/vat-rates)returns are generally completed quarterly.  To return [VAT ](https://www.gov.uk/vat-rates)through the [VAT ](https://www.gov.uk/vat-rates)return the following is calculated:  - The input tax is subtracted from the output tax that the business is required to pay [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs). - If there is then an excess of recoverable input tax over output tax the business will be able to claim a [VAT ](https://www.gov.uk/vat-rates)return from [HMRC ](https://www.gov.uk/government/organisations/hm-revenue-customs)equal to that excess.  A business must keep the appropriate records to justify the output tax chargeable by the business for the period in question.  ## Expert London Tax Lawyers If you need HMRC Tax Disputes advice, we are available to aid you at every stage of the HMRC appeals process. Members of our legal team have first-hand experience and working knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations, throughout the HMRC internal review process and in front of the Tax Tribunal. Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect including developing a strategy. We are experts in adeptly presenting evidence and employing bespoke arguments combining the facts of your case, previous cases and current legislation to ensure your appeal is a successful one. We provide urgent advice and representation to clients from our unique expert team of established tax and duties specialist solicitors and barristers with a proven track record of delivering authoritative results. Just call us on 0207 1830 529, or email [contact@lexlaw.co.uk](javascript:;).