Businesses that deferred VAT payments due between 20 March and 30 June 2020, and cannot afford to pay by 31 March 2021, have the option of joining a new scheme allowing them to pay the deferred VAT over a longer period. The VAT deferral new payment scheme opened on 23 February and will close on 21 June 2021.
The scheme lets a business pay any outstanding deferred VAT in equal instalments without incurring interest or penalties. The number of instalments can be between two and 11, depending on when a business joins the scheme.
Instalment options
To benefit from the maximum 11 instalments, a business needs to join the scheme by 19 March 2021. For later joining dates:
| Join by | Maximum instalments |
| 21 April | 10 |
| 19 May | 9 |
| 21 June | 8 |
Of course, fewer instalments than the maximum can be selected. The first instalment is payable at the time of joining, with a direct debit set up required for subsequent payments. All instalments must be paid by 31 March 2022.
How to join
A business has to opt in to the new scheme. This is done using the business’ Government Gateway account, and one will need to be created if not already set up. Before joining, a business must:
- Be up to date with its VAT returns;
- Correct errors on VAT returns as soon as possible;
- Make sure they know how much VAT was originally deferred, and how much is still outstanding;
- Decide on the number of instalments to pay; and
- Be able to make the first instalment.
Because of the direct debit requirement, the new scheme cannot be set up by an agent. If a business is unable to use the online service or pay by direct debit, then they should contact the COVID-19 helpline on 0800 024 1222. The starting point to join the VAT deferral payment scheme can be found here.
If you need any assistance, please contact our team of Accounting & Business Advisory on 01142 664 432 or info@smhca.co.uk
Comments are closed.