One of our clients, who like many other businesses is struggling during the pandemic, asked me if he could delay paying the VAT they had already deferred back in April 2020. The short answer is yes. There is a new payment scheme that HMRC have set up for businesses which were allowed to defer between 20 March 2020 and 30 June 2020.
You may already know that all deferred VAT has to be paid by 31 March 2021. Should you choose to pay before this date, you can still do so, without making any special arrangements.
However, HMRC have since introduced a new payment plan scheme to allow the VAT to be paid by instalments. Businesses can sign up via a new portal, which will open on 23 February 2021. If you sign up by 19 March 2021, you will be able to pay by up to 11 instalments. The scheme is available for signing up to 21 June, however, the later you sign up, the less instalments will be available to you.
If businesses do not either pay the full amount, sign up for the new scheme or contact HMRC to arrange a Time to Pay arrangement, they will start to incur interest on the outstanding amounts.
The new portal opens for applications on 23 February 2021 and businesses have to apply by 21 June 2021. Alternatively, you can also choose to arrange for a Time to Pay arrangement instead.
There are two important points to note: first, all VAT returns must have been submitted before applying for the new scheme and all errors on the returns have to be corrected. Second, agents will not be able to sign the businesses up for the new scheme and so businesses will have to do this themselves via their gateway account.
If you have any questions regarding the above, please get in touch with us.