If you are a director of a company and need to delay your VAT payment, Oliver Elliot can help you address your concerns and consider with you the VAT Deferral New Payment Scheme.
HMRC VAT Tax Debts
Covid-19 has placed many new challenges on businesses, including payment of their VAT bills.
What Is VAT Deferral New Payment Scheme?
If you delayed VAT payments due between 20 March 2020 and 30 June 2020 and still have payments to make, you can:
- pay the deferred VAT in full, on or before 31 March 2021
- join the VAT deferral new payment scheme – the online service is open between 23 February 2021 and 21 June 202
- contact HMRC on Telephone: 0800 024 1222 by 30 June 2021 if you need extra help to pay
You may be charged interest or a penalty if you do not:
- pay the deferred VAT in full by 31 March 2021
- opt into the new payment scheme by 21 June 2021
- agree extra help to pay with HMRC by 30 June 2021
Pay your deferred VAT in full
You can pay your deferred VAT in full by 31 March 2021.
You do not need to contact HMRC.
Join the VAT deferral new payment scheme
The VAT deferral new payment scheme is open from 23 February 2021 up to and including 21 June 2021.
If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you can join the scheme from 10 March 2021.
The new scheme lets you:
- pay your deferred VAT in equal instalments, interest free
- choose the number of instalments, from 2 to 11 (depending on when you join)
Instalment options available to you
When you decide to join the scheme will determine the maximum number of instalments that are available to you.
The following table sets out the monthly joining deadlines (to allow for Direct Debit processing) and the corresponding number of maximum instalments (including the first payment):
If you join by Number of instalments available to you
19 March 2021 11
21 April 2021 10
19 May 2021 9
21 June 2021 8
How to join the VAT deferral new payment scheme
Before joining, you must:
- create your own Government Gateway account (if you do not already have one)
- submit any outstanding VAT returns from the last 4 years – otherwise you’ll not be able to join the scheme
- correct errors on your VAT returns as soon as possible
- make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid
To use the online service, you must:
- join the scheme yourself, your agent cannot do this for you
- still have deferred VAT to pay
- be up to date with your VAT returns
- join by 21 June 2021
- pay the first instalment when you join
- pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)
Join the scheme now
If you cannot use the online service
There may be circumstances where you cannot use the online service, for example if you:
- do not have a UK bank account
- cannot pay by Direct Debit
- have dual signatories on your account
If you want to join the new payment scheme, but cannot use the online service, contact the COVID-19 helpline on Telephone: 0800 024 1222. An adviser will help you join.
Correcting errors on VAT returns for the VAT deferral period
The VAT deferral period covered accounting periods for:
May 2020 – for payment on account customers and certain non-standard tax periods only, in addition to the above periods
If you notice an error on a VAT return which relates to a period covered by the scheme, you should:
Deferring extra payments resulting from error corrections
If you want to defer extra payments resulting from error corrections, contact the COVID-19 helpline (Telephone: 0800 024 1222) after both of the following have happened:
- HMRC have processed your error correction
- you’ve received a statement of account confirming the balance
You can then either:
- include the payments in your deferred balance and pay in full by 31 March 2021
- include the payments in your deferred balance and join the new payment scheme while it is open
- contact HMRC if you need more help to pay on Telephone: 0800 024 1222
You cannot include extra payments after you’ve joined the scheme. Any error correction relating to the deferral period that is notified to HMRC after 31 March 2021, cannot be deferred.
You may be contacted by HMRC if we’ve carried out a VAT compliance check and found that extra payments are due for the deferral period. You must also contact the COVID-19 helpline (Telephone: 0800 024 1222) if you want to defer these payments.
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Disclaimer: VAT Deferral New Payment Scheme
This page: VAT Deferral New Payment Scheme is not legal advice and should not be relied upon as such. This article VAT Deferral New Payment Scheme is provided for information purposes only. You can Contact Us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.
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