The Government announced on 24 September 2020 that it will give businesses, which deferred VAT due in March to June 2020, the option to spread their payments over the financial year 2021/2022.
So, if you deferred VAT between 20 March and 30 June 2020 and still have payments to make, you can:
- – pay the deferred VAT in full on or before 31 March 2021
- – opt-in to the VAT deferral new payment scheme when it launches in 2021
- – contact HMRC if you need more help to pay
Pay Your Deferred VAT
You can pay your deferred VAT in full by 31 March 2021.
You do not need to contact HMRC.
Hot to Opt-in to the New Payment Scheme
You cannot opt-in yet. The online opt-in process will be available in early 2021. You must opt-in yourself, your agent cannot do this for you.
Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest-free. All instalments must be paid by the end of March 2022.
The scheme will allow you to:
- – pay your deferred VAT in instalments without adding interest
- – select the number of instalments from 2 to 11 equal monthly payments
To use this scheme you must:
- – still have deferred VAT to pay
- – be up to date with your VAT returns
- – be able to pay the deferred VAT by Direct Debit
If you opt-in to the scheme, you can still have time to pay arrangement for other HMRC debts and outstanding tax.
Getting Ready to Opt-in to the New Payment Scheme
Before opting in you must:
- – create your own Government Gateway account if you don’t already have one
- – submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
- – correct errors on your VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in your deferred VAT balance
- – make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid
You should also:
- pay what you can as soon as possible to allow us to show the correct deferred VAT balance
- consider the number of equal instalments you’ll need, from 2 to 11 months.
HMRC have informed us that the following do not qualify for deferral:
- – Payments of import VAT, Customs Duties or other taxes (such as Insurance Premium Tax, Machine Games Duty etc.) unless covered by another Government announcement.
- – VAT due to be paid in relation to disclosures and assessments due to HMRC.
- Time To Pay (TTP) arrangements for payments due before 20 March 2020.
If You Are Not Able to Pay Your Deferred VAT
If you are still unable to pay and need more time, find out what to do if you cannot pay your tax bill on time.
For advice and information on other support available use the get help and support for your business guide.
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Ishan provides financial management, taxation and transactional advice to business entities of all sizes. His expert areas include statutory compliance, business taxation, personal tax & transactional processing and systems. Industry sectors include professional services, retail, hospitality and entertaining & media and advertising services.