VAT deferral new payment scheme now open

You now have the option to spread your repayments of VAT deferred from summer 2020. The new VAT deferral payment scheme is open from 23 February 2021 to 21 June 2021. However, HMRC has advised that tax advisors will not be able to use this system on behalf of their clients.

VAT deferral – business context

All VAT-registered businesses had their VAT payments automatically deferred for amounts due to be paid between 20 March and 30 June 2020. No interest or penalties have been charged on that outstanding VAT debt and businesses could choose to pay the amount due at any time.

The deadline for paying deferred VAT

HMRC initially set a deadline of 31 March 2021 for all deferred VAT amounts to be paid in full. However, businesses will now have the option to defer at least some of their VAT debt until January 2022.

NEXT STEPS

If you can, pay any outstanding VAT debt in full by 31 March 2021.

If you are unable to pay the VAT debt in full, arrange a payment plan using the new online portal between 23 February and 21 June. You will be able to spread payment of the debt over up to 11 instalments (ending in January 2022).

Click here for information about the VAT deferral scheme and how to contact HMRC.

IMPORTANT:
You may be charged interest or a penalty if you do not:

• pay the deferred VAT in full by 31 March 2021
• opt into the new payment scheme by 21 June 2021
• agree extra help to pay with HMRC by 30 June 2021.

Using the online portal

The company director or business owner must access this portal themselves and have authority to set up a Direct Debit for the company.

Click here for information about the VAT deferral scheme and how to contact HMRC.

Action to take BEFORE you apply for a VAT deferral payment plan

You will be able to arrange a payment plan for deferred VAT even if you have already agreed a Time to Pay arrangement for other taxes.

Before applying for a VAT payment plan it’s important to get your VAT in order as follows:

• submit any outstanding VAT returns for the last four years
• correct any errors on past VAT returns
• know how much VAT was deferred
• know how much of that deferred VAT debt is still outstanding
• have enough cash ready to pay the first instalment of the VAT due immediately.

Here to help with VAT advice

If you need advice on any other VAT matter please get in touch. Contact one of our offices or enquire online.