Businesses that took up HMRC’s offer to defer some or all of their VAT liability due for payment between 20 March and 30 June 2020 are to be given more time to pay.
Originally, the terms of the offer required the deferred VAT to be paid in full by no later than 31 March 2021. However, because of continued tough trading conditions HMRC will allow extra time through a new scheme that it will launch in early 2021. HMRC will shortly announce further information about the scheme and how to sign up for it.
If you have deferred VAT your options for settling it are:
- pay in full on or before 31 March 2021
- opt in to the new VAT deferral payment scheme when it launches in early 2021; or
- make a “time to pay arrangement” with HMRC.
The new scheme will allow you to settle what you owe over a maximum of eleven monthly instalments ending no later than 31 March 2022. HMRC will not charge any interest over that period. To use the scheme you must be up to date with your VAT returns and be able to pay the deferred VAT by direct debit.
HMRC has confirmed that if you opt in to the new scheme you can still set up a time to pay arrangement for other tax debts. More information on these arrangements is available here.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.