As part of the on-going government response and financial support to businesses affected by COVID-19 last year, VAT-registered firms were allowed to defer VAT payment due between 20th March 2020 and 30th June.
When do you need to pay your deferred VAT?
At first, the government requested that any deferred VAT payment be made on or before 31st March of this year (2021).
For VAT registered businesses affected by the pandemic disruption, settlement of any outstanding VAT by the 31st March 2021 date may still not be possible due to current circumstances.
Is it possible for you to take advantage of the new payment scheme?
Recognising this difficulty, the government has now created a new payment scheme that will allow you to further delay repayments on an instalment basis such that any VAT owing is settled in full by 31st March 2022.
To use this scheme, you must:
· Still have deferred VAT to pay
· Your VAT returns must be up to date
· Opt-in prior to 31st March 2021
· The first instalment must be paid before the end of March 2021
· Ensure you can make payment of your deferred VAT by Direct Debit
If you opt into the scheme, you can still have a “time to pay arrangement” for other HMRC debts and outstanding tax.
Taking advantage of this new scheme
HMRC is now in the process of setting up an online application process. At this time, however, it is still not available. When applications start to be taken, we will let you know as a matter of urgency. However, for you to be considered for this scheme, you must ensure that you:
· Sign up for your own Government Gateway account (if you don’t have one already).
· Submit any unresolved VAT returns from the last four years. You’ll not be able to sign up for the scheme if you haven’t done this.
· Make right any errors on your previous VAT returns as soon as possible.
· Make sure you know the amount of money you owe. This includes the amount you deferred initially and what you may have already paid.
You should also:
· Make a payment on what you can as soon as possible to show the correct deferred VAT balance.
· Look at the number of equal instalments you’ll need, from two to 11 months.
An Accounting Gem can help
If you would like a hand in taking advantage of this new payment scheme, call us on 01473 744700, contactus@accountinggem.co.uk, or visit our website www.aag-accountants.co.uk.