Businesses that deferred VAT payments last year can now join HMRC’s new online VAT Deferral Payment Scheme, allowing you to spread the payments over smaller, more manageable monthly instalments.
What is HMRC’s online VAT deferral payment scheme?
If you deferred VAT payments due between the 20th March 2020 and the 30th June 2020 and still have payments to make, you could benefit from HMRC’s new online VAT deferral payment scheme. As part of the new scheme, you can pay your deferred VAT in 2 to 11 monthly instalments, interest-free, starting in March, April, May or June 2021.
Businesses will need to opt-in to the VAT deferral payment scheme, and you can do this via the online service, which opened on the 23rd February 2021 and closes on the 21st June 2021. Payments can start from as early as March 2021, and the earlier you opt-in, the more instalment options are available to help spread the cost.
Please be aware; you may be charged interest or a penalty if you:
- Do not pay the deferred VAT in full, on or before the 31st March 2021
- Do not join the new VAT deferral payment scheme by the 21st June 2021
- Have not agreed to extra help to pay with HMRC by the 30th June 2021
Jesse Norman, Financial Secretary to the Treasury, said:
“The government has provided a package of support worth over £280 billion during the pandemic to help protect millions of jobs and businesses.
This now includes the VAT Deferral New Payment Scheme, which will help provide businesses with the breathing space they may need to manage their cashflows in the weeks and months ahead.”
What instalment options are available?
The month you join the scheme will determine the maximum number of instalment options that are available to you – the earlier you join, the more instalments you can benefit from. For example, if you join the scheme in March, you can pay your deferred VAT in a maximum of 11 instalments. The number of instalments available decreases each month, and you can view the monthly joining deadlines on the government’s website.
How to join the new VAT Deferral Payment Scheme
Before you join the new VAT payment scheme, you must make sure you do the following:
- Create a Government Gateway account (if you do not already have one)
- Submit any outstanding VAT returns from the last 4 years
- Correct any errors on your VAT returns
- Make sure you know how much you owe, including any deferred amounts and how much you need to pay
To be able to join the payment scheme, you must:
- Join the scheme yourself; an agent cannot do this on your behalf
- Still have deferred VAT to pay
- Be up to date with your VAT returns
- Join by the 21st June 2021
- Pay the first instalment due when you join the payment scheme
- Pay your instalments by Direct Debit (if you want to use the scheme but cannot pay via Direct Debit, there’s an alternative entry route for you
What options are available if I am not able to pay my deferred VAT?
If you are worried you may not be able to pay on time or think you may miss a payment; you should contact HMRC as soon as possible to discuss your options.
Speak to your Account Manager for more information
If you are a Churchill Knight & Associates Ltd client and would like more information about the next steps to take if you need to pay deferred VAT payments, please contact your Account Manager.
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