Businesses that deferred VAT payments last year have less than a month left to join online and pay in monthly instalments under the VAT Deferral New Payment Scheme, HMRC has warned.
The online portal for the new payment scheme will close on 21 June 2021.
Over half a million businesses deferred £34 billion in VAT payments due between March and June 2020 under the VAT Payment Deferral Scheme. Businesses had until 31 March 2021 to pay this deferred VAT or, if they could not afford to do so, they could go online from 23 February to set up a new payment scheme and pay by monthly instalments to spread the cost.
Jim Harra, HMRC’s Chief Executive, said:
‘Businesses that deferred paying their VAT last spring have until 21 June to join the VAT Deferral New Payment Scheme online. They should act now to avoid missing out on this opportunity to spread payment of their deferred VAT across monthly, interest-free, instalments.
‘The new payment scheme is part of the Government package of support worth over £350 billion to help protect millions of jobs and businesses during the pandemic and as we emerge on the path to recovery.
‘HMRC will continue to do all we can to help businesses as they reopen and rebuild.’
HMRC has announced that businesses that deferred VAT payments last year can now join the new online VAT Deferral New Payment Scheme to pay it in smaller monthly instalments.
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 opened 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.’
HMRC has issued some guidance to taxpayers that deferred their VAT payments between 20 March and 30 June 2020 and still have payments to make.
HMRC is advising taxpayers who deferred their VAT payments to:
- pay the deferred VAT in full on or before 31 March 2021
- or opt in to the VAT deferral new payment scheme when it launches in 2021
- or to contact HMRC if they need more help to pay.
Taxpayers can pay their deferred VAT in full by 31 March 2021. There is no need to contact HMRC. However, if taxpayers want to use the new payment scheme they will need to opt in. The new online opt in process will be available in early 2021. Taxpayers will need to opt in themselves as this cannot be carried out by tax agents.
Where taxpayers opt in to the VAT deferral new payment scheme instead of paying the full amount by the end of March 2021, they can make up to 11 smaller monthly instalments which are interest free. All instalments of the outstanding amount must be paid by the end of March 2022.
In order for taxpayers to use the scheme they must:
- still have deferred VAT to pay
- be up to date with their 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.
Taxpayers must prepare to opt in by:
- creating their own Government Gateway account if they do not already have one
- submitting any outstanding VAT returns from the last four years. You will not be able to join the scheme if you have not done so
- correcting errors on their VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in their deferred VAT balance
- ensuring they know how much they owe, including the amount they originally deferred and how much they may have already paid.
Internet link: GOV.UK guidance
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