If you took advantage of the offer to defer VAT payments falling due between 20 March 2020 and 30 June 2020 – to help out with the impact of COVID disruption – you now have three choices. 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
If you want 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, we 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
- Opt-in before the end of March 2021
- Pay the first instalment before the end of March 2021
- Be able to pay the deferred VAT by Direct Debit
If you opt-in to the scheme, you still have time to pay arrangement for other HMRC debts and outstanding tax.
Get 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 return 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 HMRC to show the correct deferred VAT balance
- Consider the number of equal instalments you’ll need, from 2 to 11 months
If you would like to discuss this article in more depth, please contact DSC Accountants today.