The VAT Deferral Scheme
On February 11th HMRC announced that as part of its COVID-19 support, all VAT registered businesses were able to defer their VAT liabilities generating between March 20th and June 30th 2020 to help with their cashflow.
In this blog we take a look at the new scheme, how it works, how you can register, and what the prerequisites are.
How does the new scheme work?
Full payment of the deferred VAT was due by March 31st 2021, but last week HMRC introduced a new online scheme to assist businesses who may be experiencing difficulties in paying any outstanding amounts. It’s called the VAT deferral new payment scheme.
The scheme will be available between February 23rd and June 21st 2021. Once you have registered and your business has been accepted, you will be able to pay any deferred VAT in equal instalments, interest free.
You can also choose the number of instalments, from two to eleven. This is dependent on when you join.
How can you register your business?
Go to the gov.uk website to register. You’ll need to setup a government gateway account, so if you’d like to join the scheme we strongly advise doing so quickly, to ensure you get the maximum number of instalments available.
How else can you register if you’re unable to do so online?
You can contact HMRC’s COVID-19 helpline on 0800 024 1222 when the scheme opens.
Can your accountant do it for you?
Unfortunately not, only you can register your own business.
What other prerequisites are there?
To qualify you must:
- still have deferred VAT to pay
- be up to date with four of your latest VAT returns
- have joined by July 21st 2021
- pay your first instalment upon joining
- pay all instalments via direct debit
If you also have other payment arrangements with HMRC such as the Time to Pay arrangement or other debts and outstanding tax, you’re still eligible for the scheme.
What if your business is on the VAT Payment on Account Scheme or the VAT Annual Accounting Scheme?
You can still make use of the new scheme, and you’re able to join from 10/03/2021.
What happens if you don’t pay by 31st March, join the new scheme or arrange any additional support with HMRC?
You may face paying penalties or interest.
How can SG Accounting help?
Our team here have their fingers on the pulse when it comes to HMRC’s announcements and how our clients might be affected. If this is the level of latest advice and support you need from your accountant, get in touch today.
Note: All the information and advice in this blog post was correct at the time of writing.
