UK: HMRC provides businesses that wished to defer VAT payments as a result of COVID-19, but failed to cancel their direct debits in time, with an opportunity to claim a refund.

By Jack Prytherch, Christopher Young


On 26 March 2020, HMRC published guidance offering UK VAT registered businesses the option to defer any VAT payments falling due between 20 March 2020 and 30 June 2020 until 31 March 2021. The offer was made as part of the suite of measures brought in to assist businesses in coping with the impact of COVID-19. In addition to deferment, HMRC also agreed not to charge interest or penalties on any deferred VAT payments.

While a large number of businesses wishing to defer their VAT payments did so successfully, it is understood that some businesses missed this opportunity as they were unable to cancel their direct debit instruction in time.

HMRC has recently confirmed that businesses which intended to defer VAT payments, but failed cancel their direct debit in time, can now claim a refund.

What to do next

There are two methods available to businesses wishing to obtain a refund:

  • Indemnity claim via your bank – the quickest way to receive a refund is likely to be the submission of a direct debit indemnity claim to a bank. Businesses are encouraged to contact their bank for details of the relevant procedure to follow to make a direct debit indemnity claim as each bank may be different.

  • Repayment from HMRC – Refunds can be requested directly from HMRC via the coronavirus helpline. However, businesses are reminded to ensure that their bank details are updated using the online services and to be aware that due to COVID-19 restrictions, it may take up to 21 days for the refund to be received.

Further guidance on the payment of deferred amounts is expected to be issued by HMRC at the end of the deferral period and businesses will also need to make arrangements to pay VAT falling due from 1 July 2020 to 31 March 2021 (ie, those amounts that are not deferred). Any businesses that believe they may struggle to repay the deferred amounts are advised to make contact with HMRC as early as possible and explore the possibility of agreeing a time to pay arrangement.

If you have any queries relating to COVID-19 support obtained from HMRC and/or exploring a time to pay arrangement please contact Jack Prytherch ([email protected] ) or Chris Young ([email protected]) to discuss how we can help.