Businesses urged to reinstate VAT direct debits 18 Jun 2020Business have been reminded to reinstate their direct debit mandates before the deferral of VAT payments due to the coronavirus (COVID-19) comes to an end on 30 June. The VAT payment deferral means that all UK VAT-registered businesses have the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021. However, businesses need to take steps to reinstate their direct debit mandates so that they are in place in time for payments due from July 2020 onwards. Any outstanding returns should be filed and three working days should be allowed to elapse before reinstating the direct debit mandate. The Tax Faculty at the Institute of Chartered Accountants in England and Wales (ICAEW) said: 'HMRC has confirmed to the Tax Faculty that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary systems change to avoid this happening for businesses in Making Tax Digital for VAT (MTD for VAT). 'Arrangements will also need to be made to pay the deferred VAT by 31 March 2021; further guidance is awaited from HMRC on the mechanism.'