By Pamela Phillips
Remember when, back in March 2020, the Chancellor announced the first wave of support for businesses affected by Covid? I know, can you believe it was nearly a year ago?!
One of the things that was announced was that any VAT payments that were originally due to be paid between 20 March 2020 and 30 June 2020 could be deferred until 31 March 2021.
As we are fast approaching the date that the deferred VAT will need to be paid, we thought it would be helpful to share with you what you need to do now, and the options available to you if you can’t afford to make this payment by the 31st March 2021.
Paying the deferred VAT
You can pay the deferred VAT in full any time before 31 March 2021. Remember that as HMRC is not charging any interest or late payment penalties on the unpaid VAT, there is no benefit to you in paying before the 31st March but it is important that you do pay in full by that date.
We are waiting on confirmation from HMRC on whether they will automatically collect any deferred VAT by direct debit if you have one set up, or if you need to make a manual payment. We'll share an update on this when we have an answer.
Set up a payment scheme
Instead of paying the full amount of VAT owed by the end of March 2021, you can opt into a new payment scheme with HMRC where you can make up to 11 smaller monthly payments interest-free. All installments must be paid by the end of March 2022.
To use this scheme you must:
- Still have deferred VAT to pay
- Be up to date with your VAT returns
- Opt-in before the end of March 2021
- Pay the first installment when you opt-in.
If you do opt-in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.
How to set up a payment scheme
You can set up a payment scheme through your online business account. Read our blog on VAT Deferral New Payment Scheme for more information on how to do this.
Keep in touch
If you are a client of ours who is worried about being able to pay your deferred VAT, do get in touch with your Client Manager who will be able to guide you through your options