17th December 2020 Posted by - Alexander Accountancy
The coronavirus VAT payment holiday gave businesses the chance to defer the payment of any VAT liabilities between 20 March 2020 and 30 June 2020. The option for businesses to defer their VAT payments ended on 30 June 2020.
There are two options available for repaying this VAT.
- The first option is to pay the deferred VAT in full on or before 31 March 2021. No interest or penalties will accrue on deferred payments that are paid by the new due date and there is no requirement to contact HMRC.
- The second option is to further defer the amount of VAT due. The new VAT deferral payment scheme will allow businesses the option to pay the deferred VAT in smaller payments over a longer period. Instead of having to repay the full amount by 31 March 2021, businesses will now be able to make smaller interest-free payments during the 2021-22 financial year and pay the VAT due by 31 March 2022.
Businesses will need to opt-in to the new payment scheme by the end of March 2021. The opt in process will be available in early 2021. Businesses will also need to opt in themselves and will not be able to use an agent to do this for them.
The new payment scheme will allow businesses to pay their deferred VAT in instalments without adding interest and select the number of instalments from 2 to 11 equal monthly payments. Businesses must meet certain conditions to use the scheme including being up to date with the submission of their VAT returns.
