26th February 2021 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 VAT deferral new 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 thus complete payment of the VAT due by 31 March 2022.
HMRC has now confirmed that the VAT deferral new payment scheme will be open from 23 February up to and including 21 June 2021. Nearly all businesses are expected to use HMRC’s online service to sign up. VAT registered businesses will need to opt in to the scheme and will not be able to use an agent to do this.
The new scheme will allow businesses to pay their deferred VAT in instalments without adding interest and select the number of equal monthly instalments from 2 to 11 (depending on when they join the scheme). Businesses will need to sign up by 19 March 2021 to benefit from the maximum number of instalments. Businesses must also meet certain conditions to use the scheme including being up to date with their VAT returns.
Anyone using the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, will be invited to join the new payment scheme later in March 2021.
