Post-Brexit visa rules: what you need to know

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The end of the Brexit transition period on December 31 last year also saw the end of freedom of movement. The UK’s new visa points system now applies to newly arrived EU citizens planning to work here.

So, what does that mean for employers? Well, UK and EU citizens already holding residency in Europe or Britain have the same rights as before.

However, people from the EU now looking to live and work here have to go through mandatory requirements in order to gain a skilled work visa based on the points system that has been introduced. Although that doesn’t affect people coming from the Republic of Ireland.

Employers must have a sponsorship licence issued by the Home Office before they can employ non-UK resident workers coming into the country. Without one they will be unable to hire or extend current visas.

As a sponsor you need to be fully aware of your immigration duties and have processes and system in place to meet them and to maintain records that show you are complying.

UK Visas and Immigration (UKVI) will review your application form and supporting documents. They may visit your business to make sure you’re trustworthy and capable of carrying out your duties.

You can sponsor a worker if the job they’re going to do has a suitable rate of pay and skill level, or meets the other criteria needed for their visa.

The licence you need depends on whether the workers you want are filling a long-term job or are temporary. You can apply for a licence covering one or both types.

You also need to appoint people within your business to manage the process when you apply for a licence, using the government’s sponsorship management system (SMS).

The roles needed are:

• authorising officer – a senior and competent person responsible for the actions of staff and representatives who use the SMS
• key contact – your main point of contact with UK Visas and Immigration (UKVI)
• level 1 user – responsible for all day-to-day management of your licence using the SMS

These roles can be filled by the same person or different people. You and your staff will be checked to make sure you’re suitable for these roles.

You will get an A-rated licence if your application is approved. That lets you start assigning certificates of sponsorship and also means your business will be listed in the register of sponsors.

However, that A-rated licence may be downgraded to a B-rating at a later stage if you do not continue to meet your sponsor duties.

If this happens, you will not be able to issue new certificates of sponsorship until you’ve made improvements and upgraded back to an A-rating.

You’ll still be able to issue certificates to workers you already employ who want to extend their permission to stay.

You must assign a certificate of sponsorship to each foreign worker you employ. This is an electronic record, not a physical document. Each certificate has its own number which a worker can use to apply for a visa.

When you assign the certificate to a worker, they must use it to apply for their visa within three months.

‘Defined certificates’ are for people applying on a Skilled Worker visa from outside the UK.

You must apply for defined certificates for these workers through the sponsorship management system (SMS). You’ll get access to this when you get your licence.

‘Undefined certificates’ are for skilled workers applying from inside the UK, and applicants on all other visas.

When you apply for your licence, you’ll be asked to estimate how many undefined certificates you’ll need for workers and temporary workers in the first year.

Certificates are free for citizens of the following countries: Austria, Belgium, Croatia, Republic of Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Luxembourg, Malta, Netherlands, North Macedonia, Norway, Poland, Portugal, Slovakia, Spain, Sweden or Turkey.

For other citizens, you need to pay for each certificate.

You must:

• Check that your foreign workers have the necessary skills, qualifications or professional accreditations to do their jobs, and keep copies of documents showing this
• Only assign certificates of sponsorship to workers when the job is suitable for sponsorship
• Tell UKVI if your sponsored workers are not complying with the conditions of their visa

Your licence may be downgraded, suspended or withdrawn if you do not meet these responsibilities and requirements.

You must also have HR systems in place that let you monitor your employees’ immigration status, keep copies of relevant documents for each employee, including passport and right to work information and track and record employees’ attendance.

You also ned to keep employee contact details up to date and report to UKVI if there is a problem, for example if your employee stops coming to work.

And you must also report any significant changes in your own circumstances within 20 working days, for example if you stop trading or become insolvent, substantially change the nature of your business or are involved in a merger or take-over.

You must also tell UKVI if you’re changing your details, like your address or allocated roles.

VAT Deferral New Payment Scheme opens

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VAT liabilities deferred last year can now be spread interest free over 12 months from March to help businesses struggling with the impact of Covid-19.

To take advantage you must ‘opt in’, to the VAT Deferral New Payment Scheme which went live on February 23.

HMRC says that the new scheme will be open up to and including June 21, 2021.

You can get more details about how to join at: https://www.gov.uk/government/news/vat-deferral-new-payment-scheme-online-service-opens

If you are on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you will be invited to join the new payment scheme later in March.

The new scheme lets you pay your deferred VAT in equal instalments, interest free.

You can choose the number of instalments, from two to 11, depending on when you join.

To use the online service, you must:

• join the scheme yourself, your agent cannot do this for you
• still have deferred VAT to pay
• be up to date with your VAT returns
• join by June 21 2021
• pay the first instalment when you join
• pay your instalments by Direct Debit (if want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)

If you join the scheme, you can still have a Time to Pay arrangement for other HMRC debts and outstanding tax.

The month you decide to join the scheme will determine the maximum number of instalments that are available to you.

If you join the scheme in March, you will be able to pay your deferred VAT in 11 instalments or fewer.

Before joining, you must:

• create your own Government Gateway account (if you do not already have one)
• 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
• If you want to join the new payment scheme, but cannot use the online service, contact the Covid-19 helpline on: 0800 024 1222. An adviser will help you join.

More help unveiled for Self Assessment taxpayers

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HM Revenue and Customs has announced that Self Assessment taxpayers will not be charged the five per cent late payment penalty if pay their tax or set up a payment plan by April 1.

The payment deadline for Self Assessment is January 31 and interest is charged from February 1 on any amounts that are outstanding.

Normally, a five per cent late payment penalty is also charged on any unpaid tax that is still outstanding on March 3.

However, this year, because of the impact of the Covid-19 pandemic, HMRC is giving taxpayers more time to pay or set up a payment plan.

Taxpayers can pay their tax bill or set up a monthly payment plan online at the GOV.UK website. They need to do this by midnight on April 1 to prevent being charged a late payment penalty.

The online Time to Pay facility allows taxpayers to spread the cost of their bill into monthly instalments until January 2022.

HMRC says that it recognises the pressure affecting taxpayers due to the pandemic, and is encouraging anyone worried about paying their tax and unable to set up a payment plan online to contact it for help and support on 0300 200 3822.

Latest figures reveal that more than 97,260 customers have set up a self-serve Time to Pay arrangement online, totalling more than £367m

Jim Harra, HMRC’s chief executive, said: “Anyone worried about paying their tax can set up a payment plan to spread the cost into monthly instalments.

“Support is available at GOV.UK to help anyone struggling to meet their obligations.”

There are several ways that taxpayers can pay their Self Assessment tax bill in full. They can pay online, via their bank, or by post.

Taxpayers should still pay in full if they can. This is the only way to stop interest accruing.

Self Assessment taxpayers who are required to make Payments on Account, and know their 2020 to 2021 tax bill is going to be lower than in 2019 to 2020 – for example due to loss of earnings because of Covid-19 – can reduce their Payments on Account.

Self Assessment taxpayers who have yet to file their 2019 to 2020 tax return should file by February 28 to prevent being charged a late filing penalty of £100.

To discuss any issues raised in this article please contact WNJ on 01772 430000

New VAT rules for the construction industry: Are you ready?

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New VAT rules for the construction industry will finally come into effect on March 1 so it’s important those affected start getting ready.

The ‘domestic reverse charge’ means the UK customer who gets supplies of construction services must account for the VAT due on these supplies on their VAT return, rather than the UK supplier.

Businesses will need to adapt their accounting systems for dealing with VAT and there will be a negative impact on the cash-flows for many of those affected, as they will no longer get VAT payments from customers for services where the reverse charge applies.

The taxman says the change will remove “the scope for fraudsters to steal the VAT due”. The new reverse charge will apply to a wide range of services in the building trade.

The government delayed the implementation of these VAT changes for a second time last year, to help businesses overcome the effects of the coronavirus pandemic but now the clock is ticking to March 1.

The changes only apply to supplies of building or construction services made to or received by businesses registered for UK VAT, where such a supply must be reported through the Construction Industry Scheme (CIS). It will not apply to consumers or businesses customers not meeting the reporting criteria.

GETTING PREPARED

It is important to make sure your accounting systems and software can deal with the changes. You should also consider whether this will affect your cash flow and make sure staff responsible for VAT accounting are familiar with the reverse charge and how it will work.

WHO DOES THE REVERSE CHARGE APPLY TO?

Typically, it will affect sub-contractors supplying their services to other contractors in the construction industry.

Although the provisions apply principally to services in the construction sector, they cover all supplies of labour and materials in a single contract or transaction.

The reverse charge also applies to services provided by labour only sub-contractors as they are responsible for the works carried out. However, it is not intended to apply where a contractor works directly for an ‘end user’.

WHAT IS AN END USER?

These are consumers and businesses, or groups of businesses, that are VAT and CIS registered but do not make onward supplies of the building and construction services supplied to them, namely those who have an interest in the land where the work is being undertaken.

Intermediary suppliers are also exempt from the reverse charge. These are VAT and CIS registered business in a corporate group with an end user. If they buy construction services and supply them to an end user in the same group, they are all treated as if they are an end user.

End users and intermediary suppliers both need to notify the contractor of that fact.

Supplies by employment businesses, also known as labour agencies, are also not subject to the reverse charge. Agencies supplying construction workers are, for VAT purposes, treated as supplying staff rather than building and construction services.

WHAT SUPPLIERS NEED TO KNOW

You must use the reverse charge from March 1 2021, if you are VAT registered in the UK, supply building and construction industry services and:

• Your customer is registered for VAT in the UK
• Payment for the supply is reported within the Construction Industry Scheme (CIS).
• The services you supply are standard or reduced rated
• You are not an employment business supplying either staff or workers or both
• Your customer has not given written confirmation that they are an end user or intermediary supplier

You need to:

• Check if your customer has a valid VAT number
• Check your customer’s CIS registration
• Review your contracts to decide if the reverse charge will apply and tell your customers. Use the government’s flowchart to assist you –
https://www.gov.uk/guidance/vat-reverse-charge-technical-guide#changes-to-cash-flow-and-monthly-returns)

• Ask your customer to confirm whether they are an end user or intermediary supplier
• Make arrangements to alter your invoicing to identify the rate and amount of VAT due, but not to charge it to your customer
• Make sure that a narrative appears on the invoice instructing the customer to declare the VAT on their VAT return – see link below:

https://www.gov.uk/guidance/vat-reverse-charge-technical-guide#invoices

• Find out how to record the reverse chargeable transactions in your accounts
• Analyse the impact of the new rules on your cash flow and consider applying for monthly VAT returns

WHAT CUSTOMERS NEED TO KNOW

You must account for the reverse charge from March 1, if you are VAT registered in the UK, receive supplies of building and construction industry services and:

• Your supplier is registered for VAT in the UK
• Payment for the supply is reported within the Construction Industry Scheme (CIS)
• The services you receive are standard or reduced rated
• Your supplier is not an employment business supplying either staff or workers or both
• You are not an end user or intermediary supplier who has notified your suppliers of that fact

You need to:

• Check if your supplier has a valid VAT number
• Check your supplier’s CIS registration
• Review your contracts to decide if the reverse charge will apply and tell your suppliers you will not accept normal VAT invoices. Use the government’s flowchart to assist you – https://www.gov.uk/guidance/vat-reverse-charge-technical-guide#changes-to-cash-flow-and-monthly-returns
• Make arrangements to account on your VAT returns for the VAT identified as due to HMRC on your suppliers’ invoices
• Make sure that that you refuse any normal VAT invoice issued to you by a sub-contractor where the reverse charge should be applied
• Make arrangements to pay only the net value of the work to your sub-contractors
• Find out how to account for the reverse charge transactions in your accounts

To discuss any issues raised in this article and to get advice on making sure you are prepared for the changes please contact WNJ on 01772 430000

More ‘breathing space’ for Bounce Back Loan repayments

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Businesses battling to survive the impact of the Covid-19 pandemic are to be given more time to repay their government support loans.

Chancellor Rishi Sunak has announced the greater flexibility, which he says will give businesses more “breathing space to get back on their feet”.

Around £45bn has been borrowed by more than 1.4 million small firms under the government’s Bounce Back Loan scheme, which offers loans of up to £50,000.

The Treasury announced “pay as you grow” flexible terms last September. The tweaks to the scheme that have now been announced will give companies the option to extend the length of their loan from six years to ten.

Business can also opt to make interest-only payments for six months, with the ability to use this facility up to three times throughout the loan.

They can also opt for an additional six-month ‘buffer’ before making their first payment.

That move means that, along with the initial 12-month interest and repayment holiday, businesses will have 18 months before having to start paying back.

The changes announced by the chancellor come as more than 600,000 companies that took advantage of the scheme when it first opened are due to start repaying their loans in May.

There have been growing concerns about the ability of some companies to pay back the money, with the economy still in a weakened position because of the ongoing impact of the pandemic.

Announcing the latest changes, Mr Sunak said: “Businesses are continuing to feel the impact of extended disruption from Covid-19, and we’re determined to give them the backing and confidence they need to get through the pandemic.

“That’s why we’re giving Bounce Back Loan borrowers breathing space to get back on their feet, through greater flexibility and time to repay their loans on their terms.”

Banks, which have been processing the loans, will begin contacting their customers this week to explain the new options available to them.

• To discuss any issues raised by this article please contact WNJ on 01772 430000

SEISS grant – an update

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The government announced the fourth extension of its Self Employment Income Support Scheme (SEISS) in November last year.

However, it has still to release details of when this latest grant, which aims to support self-employed people who have been impacted by the coronavirus pandemic, will be paid.

It has also yet to be confirmed how much will be paid to those who are eligible for the money.

At the moment the government’s website states: “We will set out further details, including the level of the fourth grant in due course.”

The grant is set to help self-employed people who have been affected by a “significant reduction in profits”, from February 1 until April 30.

Although applications are not yet open, you can find out if you will be eligible by viewing the criteria on the government’s website.

https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme#who-can-claim)

Chancellor Rishi Sunak is expected to announce further details of this fourth grant when he delivers his Budget on March 3.

There is also speculation that he may also reveal a fifth grant as part of his overall package of further support measures for the economy, as the ongoing pandemic continues to impact on businesses in all sectors.

The third grant covers a three-month period from 1 November 2020 until 29 January 2021.

It is worth 80 per cent of average monthly trading profits paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Applications for this grant closed on January 29 this year.

To be eligible for this grant extension self-employed individuals, including members of partnerships, had to be:

• previously eligible for the SEISS first and second grant – although they did not have to have claimed them
• declare that they intend to continue to trade and either:
• currently actively trading but are impacted by reduced demand due to coronavirus
• previously trading but temporarily unable to do so due to coronavirus

These grants are being paid in two lump sum instalments each covering a three-month period.

The grants are taxable income and also subject to National Insurance contributions. The scheme has already paid out nearly £20bn.

When it comes to SEISS, you must make the claim yourself. You must not ask a tax agent or adviser to claim on your behalf as this will trigger a fraud alert, which will delay your payment.

HMRC says it will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.

Fines scrapped for missing self assessment tax deadline – for a month

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HMRC has announced that self assessment taxpayers will not be fined for filing their 2019-20 return late – as long as they file online by February 28.

More than 8.9 million have already filed their tax return. HMRC is encouraging anyone who has not yet filed their tax return to do so by January 31, if possible.

Taxpayers are still obliged to pay their bill by January 31 and interest will be charged from February 1 on any outstanding liabilities.

The taxman says that the extra time will give “breathing space” to those who have been been affected by the coronavirus pandemic.

HMRC has already confirmed that it will accept Covid disruption as a reasonable excuse for people missing the deadline.

Taxpayers who cannot afford to pay their tax bill on time can also apply online to spread their payments over time, up to 12 months.

However, they will need to file their 2019 to 2020 tax return before setting up a time to pay arrangement, so HMRC is encouraging everyone to do this as soon as possible.

HMRC’s chief executive Jim Harra said: “We want to encourage as many people as possible to file their return on time, so we can calculate their tax bill and help them if they can’t pay it straight away.

“But we recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by January 31.

“Not charging late filing penalties for late online tax returns submitted in February will give them the breathing space they need to complete and file their returns, without worrying about receiving a penalty.

“We can reasonably assume most of these people will have a valid reason for filing late, caused by the pandemic.”

Normally, late filing penalties are applied to all returns filed after the January 31 deadline. Those penalties are cancelled if the customer has a reasonable excuse for filing late.

However, this year HMRC is not issuing late filing penalties for a month to help taxpayers and agents who are unable to meet the deadline. Late filing penalties will not be issued for online tax returns received by February 28.

HMRC says it has become increasingly clear from the filing rate that some taxpayers and agents cannot file on time.

It has increased support for people who may need help with their tax liabilities. Once they have completed their 2019 to 2020 tax return, they can set up an online payment plan to spread self assessment bills of up to £30,000 over up to 12 monthly instalments.

Taxpayers can apply for self-serve Time to Pay via GOV.UK. Interest will be applied to any outstanding balance from February 1 this year.

More than 25,000 have already used the service, without needing to call HMRC, to manage their liabilities totalling £69.1million.

Those with bills over £30,000, or who need longer than 12 months to pay their bill, can call HMRC 0300 200 3822 to discuss Time to Pay.

Taxpayers who are required to make payments on account, and know their bill is going to be lower than the previous year, for example due to loss of earnings because of Covid-19, can reduce their payments on account.

• To discuss any issues raised by this article or any tax matters please contact me on 01772 430000

The countdown is on for IR35 changes

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The clock is ticking and business are being urged to get prepared for the changes to off-payroll working rules that will come into effect on April 6.

The changes to IR35 were originally set to take effect in 2020, but the start date was delayed a year as a result of the coronavirus pandemic.

However, despite that 12-month postponement, recent research has revealed that many firms are still ill-prepared for the impact the reforms will have.

Industry experts also say that it is unlikely that HMRC will announce any further postponement.

The taxman says the off-payroll working rules are designed to ensure individuals working like employees, but through their own limited company (often known as a ‘personal service company’ or ‘PSC’), or other intermediary, pay broadly the same Income Tax and National Insurance contributions (NICs) as individuals who are directly employed.

HMRC has said it will focus on ensuring compliance with the new rules, rather than investigating past arrangements.

It will not open a new compliance enquiry into a contractor’s return for tax years before April 6 in circumstances where:

• a client decides that a contract is within the off-payroll working rules (IR35)
• a contractor changes the way they work from providing and invoicing services through an intermediary entity to now being paid via a client or end user’s payroll
• a contractor ends a contract because they disagree with a client decision on status

Last year HMRC announced the only reason it will open an enquiry using information acquired through the off-payroll working rules changes is if there is reason to suspect fraud or criminal behaviour.

What the changes mean

If you contract for a medium or large-sized non-public sector organisation

From April 6 your client will be responsible for deciding your employment status for tax for the services you provide them. They should provide you with a ‘Status Determination Statement’ if the rules apply, setting out and explaining their decision.

If your client determines that your contract is inside the off-payroll working rules and so you are a deemed employee for tax purposes then your client, or the agency who pays your fees, will also be responsible for deducting Income Tax and NICs before they pay you.

You will still need to submit a tax return, but relief is available on the tax already paid.

For the tax year 2020 to 2021, your limited company or other intermediary will remain responsible for operating the off-payroll working rules and accounting for and paying the relevant Income Tax and NICs.

If you contract for a public authority

Your client is already responsible for determining your employment status for tax and they will continue to be responsible. Now they will need to provide you with a ‘Status Determination Statement’ setting out their decision about whether the off-payroll working rules apply.

If you contract for a small non-public sector organisation

You limited company or other intermediary will remain responsible for determining whether your contract is inside the off-payroll working rules, and accounting for and paying the relevant Income Tax and NICs.

If you are not sure if your client is small, you have the right to request information from them about the size of their organisation.

Clients cannot apply a blanket status assessment across all contractors

Your client must take reasonable care when making a decision about whether the off-payroll working rules apply.

Applying a decision to a group of off-payroll workers with the same role, working practices and contractual terms may be permissible in some circumstances, but it is not right to rule all engagements to be inside or outside of the rules irrespective of the contractual terms and actual working arrangements.

It is natural that businesses will consider whether limited companies or other intermediaries are the best way to engage you, and other contractors, if you are working like employees. This is a business decision for organisations to make, and organisations will be free to decide how they engage their workers.

Some organisations might decide to move you onto an employment contract or engage you through an agency rather than directly, while other organisations may choose to continue engaging you through your own limited company where this suits their business model.

Continuing to work through a limited company

These changes do not affect whether you can work through your own limited company, generally known as a ‘personal service company’, or ‘PSC’. This will still be possible after April 6, however the way the Income Tax and NICs are calculated and paid may change for some contractors, or some clients may change the way they wish to engage you and other contractors.

Contractors are not all self-employed

Your employment status, whether you are employed or self-employed, is not a matter of choice. It depends upon the terms and conditions of a particular engagement and your actual working practices. The fact that you supply your services through your own limited company is not necessarily relevant to whether you are employed or self-employed.

The off-payroll working rules will only apply to individuals who are working like employees under the current employment status tests, and do not apply to the self-employed.

For example, if you work predominantly for the same client, at their premises and following their policies and procedures, you cannot send a substitute to work on your behalf and would require permission to seek additional work elsewhere then you are more likely to resemble an employee.

• To discuss any issues relating to IR35 and the changes, please contact me on 01772 430000

Covid-19 may be a “reasonable excuse” for late filing

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Covid-19 will be accepted as a “reasonable excuse” for missing the deadline for returning a self-assessment tax return, it has been revealed.

However, the taxpayer must be able to explain how they were affected in their grounds for appealing a late filing penalty. They must also submit the return as soon as they can.

The guidance comes as figures reveal that HMRC had received 6.6 million tax returns on January 4 – slightly above half those due to be filed by the January 31 deadline.

According to reports, pandemic related personal or business disruption, whether to a taxpayer or their agent, might very well constitute a reasonable excuse.

A HMRC spokesperson said: ‘We want to encourage as many people as possible to file on time even if they can’t pay their tax straight away.

“But where a customer is unable to do so because of the impact of Covid-19 we will accept they have a reasonable excuse and cancel penalties, provided they manage to file as soon as possible after that.

“Support is in place for those who may struggle to pay with customers able to spread their payment liabilities of up to £30,000 over 12 months.”

If taxpayers or their agents are struggling to obtain the required information in time to meet the January 31 deadline, they can provide provisional figures on their return and then provide HMRC with the actual figures as soon as they can.

However, they must state that provisional figures are being provided by ticking the appropriate data item box on the return.

In other moves, the penalty appeal period has been extended to three months, and the taxman is considering potential changes to make appeals easier and quicker, according to reports.

HMRC is also allowing more people more flexibility to pay their personal self-assessment tax bills in light of the continuing pandemic.

The taxman has increased the threshold for paying tax liabilities to £30,000 to help ease any potential financial burden people may be experiencing.

Self assessment taxpayers can also apply online for additional support to help spread the cost of their bill into monthly payments, without the need to call HMRC.

The online payment plan service was already being used to set up instalment arrangements for paying tax liabilities up to £10,000 – that has now risen to £30,000.

People who need longer than 12 months to settle their tax liabilities are being advised to contact HMRC in the usual way.

HMRC has also estimated that around 95 per cent of self assessment taxpayers due to make payments on January 31 could qualify for a Time to Pay arrangement using the online self-serve facility, without speaking to one of its advisors.

People looking to set up their own self-serve Time to Pay arrangements must meet the following requirements:

They must have no:

• outstanding tax returns
• other tax debts
• other HMRC payment plans set up

The debt needs to be between £32 and £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt.

Customers using self-serve Time to Pay will be required to pay any interest on the tax owed. Interest will be applied to any outstanding balance from February 1, 2021.

WNJ is here to provide help, advice and support to all our clients during this difficult period. Please get in touch with any issues you may be facing.

Get ready for the VAT deferral payment scheme

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The opt in process for the VAT deferral new payment scheme announced by the chancellor in November is set to go live early this year and those looking to take advantage of it are being advised to make sure they are ready.

Businesses and sole traders that deferred their VAT last year as they battled the Covid-19 pandemic no longer have to pay a lump sum at the end of March 2021.

Instead, those who deferred VAT due from March 20 to June 30, 2020 have the option to pay in smaller payments over a longer period of time.

They can make smaller payments up to the end of March 2022, interest free. And that means they will be able to spread payment over the financial year 2021-22, in 11 equal instalments.

However, those wishing to take advantage of the payment scheme must opt-in online themselves. Their agent cannot do it for them. Details are expected to be announced shortly.

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 four years. You will not be able to join the scheme if you have not done so
• correct errors on your VAT returns as soon as possible. Corrections received after December 31, 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 and consider the number of equal instalments you’ll need, from two to 11 months.

If you need more help to pay your VAT, you may be eligible to get support with your tax affairs through HMRC’s ‘Time To Pay’ service. This allows you to pay off your debt by instalments over a period of time.

More information is available here: https://www.gov.uk/difficulties-paying-hmrc

A Government Gateway account is also needed if people wish to take up the increased flexibility in paying their personal self-assessment tax bills in the light of the continuing pandemic (https://wnj.co.uk/self-assessment-3/).

WNJ is also here to help and support our clients on any aspect of VAT or other issues during these difficult times. Get in touch on 01772 430000.