With full payment of the deferred VAT liabilities expected by 31st March 2021, HMRC has introduced a new online scheme to help any businesses that are still having difficulty in paying the outstanding amounts.
The ‘VAT deferral new payment scheme’ will be open between 23rd February and 21st June 2021, and when your business has been accepted the scheme will allow you to pay deferred VAT in equal instalments, free of interest.
If a business is on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, they will be invited to join the new payment scheme later in March 2021.
The month a business joins the new scheme will determine the maximum number of instalments, from 11 if it joins by 19th March, going down to eight by 21st June.
The first payment must be made when a business joins the scheme and subsequent instalments should be paid by Direct Debit. If they cannot pay by Direct Debit, an alternative entry route will be available.
To be eligible for the scheme businesses need to have their VAT returns up to date for the last four years when they apply, ensure they know how much is owed and correct errors on their VAT returns as soon as possible.
How to apply
It is important to note that to access this online service business owners must join the scheme themselves as their accountant cannot do so on their behalf.
If businesses join the new payment scheme, they can still access HMRC’s Time to Pay arrangements to help them spread the cost of other taxation liabilities such as income tax.
However, if circumstances prevent businesses using the online service, they can contact HMRC’s COVID-19 helpline when the scheme opens on 0800 024 1222.
If businesses do not pay by 31st March, join the new scheme, or arrange additional help with HMRC directly, then they may face paying interest or penalties.
For our latest COVID-19 news and guidance for your business, please visit our dedicated Coronavirus Hub.
Last updated: 15th February 2021