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.