Deferred VAT payments from 2020 can now be paid in instalments to clear the debt thanks to a new government portal.
Businesses could defer the VAT they owed between 20 March 2020 to 30 June 2020 by HMRC last year.
Outstanding sums need paying in full by 31 March this year and you can either pay in full; join the new payment scheme; call HMRC if you’re having difficulties.
By joining the VAT deferral scheme your payments will be paid in instalments.
You must opt in yourself using the portal between now and 21 June 2021. Accountants are not being allowed to sign up on your behalf. Make sure you do so if you want to pay in instalments.
Signing up before 19 March, means you will be allowed to pay your outstanding deferred VAT payments in 11 instalments. If you wait, the number of instalments reduces. Signing up just days before the portal closes on 21 June, you will have to pay it in 8 instalments.
The deferred VAT scheme
The VAT deferral payment scheme launched on 23 February and anyone on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme will be invited to join later this month.
The portal creates a platform where businesses can pay deferred VAT in equal instalments and remains interest free.
In order to start, you must ensure you’re up to date with your VAT returns, still have deferred VAT to pay and be able to pay the first instalment when you join.
What if I still can’t pay?
If you don’t have the cash (this is the case for lots of businesses during these times), you should contact HMRC to arrange a payment plan.
It’s also important to note that time to pay arrangements don’t automatically apply. In other words, if you don’t join the scheme, HMRC will treat your owed amount as a normal overdue debt. This will lead to penalties for late payments and possible debt collection procedures being launched.
Payment will be taken by direct debit, and if paying that way isn’t an option for you or your business, you should seek advice from HMRC.
The final deadline
HMRC has set an aim to have collected all of the deferred VAT by the end of January 2022. So, the earlier businesses sign up to the spread payment scheme, the more instalments will be available.
If VAT payments are something you don’t understand and you want a no-nonsense accountant to help, contact our friendly team today.