HMRC has confirmed that companies will have to pay a 5% penalty or interest if they do not pay in full or make an arrangement to pay deferred VAT by 30 June 2021.
When the covid pandemic started, the government announced a three-month deferral of VAT payments for the first tax quarter of 2020. The payments for this outstanding VAT are now due.
Companies that deferred VAT payments due between 20 March 2020 and 30 June 2020 can either pay the deferred VAT in full now or join the VAT deferral new payment scheme.
The online VAT deferral notification service is now open and businesses have to actively sign up to it before 21 June 2021. Please note that CB Reid is not able to do this on your behalf.
The aim of the scheme is to help businesses that would find it difficult to pay the deferred VAT in one go and the scheme allows taxpayers to schedule payments on a monthly basis. You can pay your deferred VAT in equal, interest free instalment; and choose the number of instalments by direct debit, from 2 to 11 (depending on when you join). This is shown below:
If you join by 21 April 2021, number of instalments – 10
If you join by 19 May 2021, number of instalments – 9
If you join by 21 June 2021, number of instalments – 8
You cannot include extra payments after you’ve joined the scheme. Any error correction relating to the deferral period that is notified to HMRC after 31 March 2021, cannot be deferred and interest will apply.
For further guidance, please follow the link below that takes you to HMRC’s web page. If you would like to speak to a member of the team at CB reid about this, we’d be happy to help.