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.