As part of the Government’s Coronavirus support package businesses were able to defer their VAT liabilities between 20 March and 30 June 2020 until March 2021. In September, it was announced that further breathing space would be available through the New Payment Scheme, which will provide the option to pay the deferred VAT in smaller instalments. Rather than paying a lump sum in full at the end of March 2021, businesses will be able to make up to 11 smaller interest-free payments during the 2021-22 financial year.
Businesses who deferred VAT and still have payments to make now have the option to either pay the deferred VAT in full on or before 31 March 2021 or alternatively opt in to the VAT deferral new payment scheme when it launches in early 2021. Businesses that can pay their deferred VAT should still do so by 31 March 2021.
The new payment scheme will allow businesses to pay their deferred VAT in interest-free instalments, as well as selecting the number of monthly instalments, which must be between two and eleven. All instalments must be paid by the end of March 2022.
Businesses who wish to use the new arrangement must opt-in to the scheme online before the end of March 2021. In order to do so, businesses must be up to date with their VAT returns and be able to make payments by direct debit.
Since the scheme requires a direct debit to be setup, businesses must opt in themselves as agents will not be able to do this process on their behalf.
In order to prepare to opt in businesses must ensure they:
- create their own Government Gateway account if they do not already have one;
- submit any outstanding VAT returns from the last 4 years as otherwise they will not be able to join the scheme;
- correct errors on any VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in the deferred VAT balance;
- know how much they owe, including the amount originally deferred and how much may have already been paid.
- pay what they can as soon as possible to allow HM Revenue & Customs (HMRC) to show the correct deferred VAT balance.
For those businesses that may still be struggling to pay their deferred VAT and need more time even with the option of the new payment scheme, then they should contact HMRC as soon as possible.
Our Current working arrangement – We remain ‘Open for business’
Our staff are continuing with office based working on a rota basis, each attending up to two days a week, whilst continuing to work from home at other times. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.
Should you have any questions regarding the deferral of VAT payments or have any other query relating to the current situation, please speak to your usual contact at the firm.
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