Businesses and sole traders that deferred their VAT earlier this year as they battled the Covid-19 pandemic will no longer have to pay a lump sum at the end of March 2021.
The deferral is part of a package of measures taken by the government to support the economy during the ongoing crisis and its impact on businesses.
The Chancellor has now announced that those who deferred VAT due from March 20 to June 30 this year will have the option to pay in smaller payments over a longer period of time.
Instead of paying the full amount by the end of March 2021, they can make smaller payments up to the end of March 2022, interest free.
That means they will be able to spread payment over the financial year 2021-22, in 11 equal instalments
They will need to opt-in to the scheme, and for those who do, it means that their VAT liabilities due for that March-June 2020 period do not need to be paid in full until the end of March 2022.
Those that can pay their deferred VAT can still do so by March 31, 2021. More information will be available from HMRC in the coming months.
Businesses and sole traders that cancelled their Direct Debit to HMRC to take advantage of the deferral will need to set up a new arrangement in time for the first payment after June 30.
Payments due after June 30 must be paid in full as normal and you must continue to file your VAT return on time.
You can pay or make payments towards your deferred VAT now or at any time up to March 31, 2021.
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
WNJ is also here to help and support our clients on any aspect of VAT or other tax issues. Please get in touch on 01772 430000.