Pay VAT deferred due to coronavirus (COVID-19)
Did you defer VAT payments last year? If so, now is the time to decide whether to pay in full or join the VAT Deferral New Payment Scheme service.
The service is open online now and you can choose to join it (opt-in) and pay your VAT in instalments.
You don’t have to opt-in but if you decide not to, you must pay in full.
As announced by Chancellor Rishi Sunak in the Winter Economy Plan, the new payment scheme allows businesses that deferred VAT payments between 20 March and 30 June 2020 under the VAT Payment Deferral Scheme to opt-in and pay their deferred VAT by smaller consecutive monthly instalments, interest free.
The online service opened on the 23rd of February and closes on the 21st of June.
The earlier businesses opt-in the more instalments are available to help spread the cost.
Businesses that do not wish to opt-in to the scheme can pay their deferred VAT on or before the 31st of March, 2021.
Whatever you decide to do, further information can be found online, but we are also here to help.
What is it all about, am I eligible and, if so, what do I need to do?
Over half a million businesses who deferred VAT payments last year can now join the new online VAT Deferral New Payment Scheme to pay it in smaller monthly instalments.
In order to take advantage of the new payment scheme, businesses will need to have deferred VAT payments between March and June 2020, under the VAT Payment Deferral Scheme. They will now be given the option to pay their deferred VAT in equal consecutive monthly instalments from March 2021.
Businesses will need to opt-in to the VAT Deferral New Payment Scheme. They can do this via the online service that opens on 23 February and closes on 21 June 2021.
Jesse Norman, Financial Secretary to the Treasury, said: “The Government has provided a package of support worth over £280bn 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.”
The new payment scheme is part of a wider government package of support, introduced which to try to protect millions of jobs and businesses.
According to HMRC, around £34bn has been injected into the UK economy so far, following the half a million businesses who deferred their VAT payment last year. The new payment scheme will continue to help the economy recover by enabling businesses, impacted by the pandemic, to manage their business cash flow at a critical time.
Payments can easily be set up via the new payment scheme portal. Businesses can spread their payments with two to 11 equal monthly instalments, interest free. Payments can start from March 2021 and the earlier businesses opt-in the more instalments are available to help spread the cost and provide further support.
Eligible businesses that are unable to use HMRC’s online services can ring the HMRC Coronavirus Helpline on 0800 024 1222 to join the scheme until 30 June 2021.
Those joining online are able to set up Direct Debit payments. The joining date is slightly longer for those unable to use online services due to the way payments are processed.
How to join
Before joining, you must:
- create your own Government Gateway account – (You may already have one, so check with us if you are not sure)?
- submit any outstanding VAT returns from the last four years, otherwise you’ll not be able to join the scheme
- correct errors on your VAT returns as soon as possible
- make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid
To use the online service, you must:
- join the scheme yourself because your agent cannot do this for you
- still have deferred VAT to pay
- be up to date with your VAT returns
- join by 21 June 2021
- pay the first instalment when you join
- pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there is an alternative entry route for you. Details can be found on the HMRC website.
If you would like more information about the scheme, call us today