HMRC have now updated their guidance upon how traders should go about settling VAT that was deferred in the period between 20‌‌‌‌‌‌ March and 30‌‌‌ June 2020.

The Government has set out more particulars as to the options and how you can prepare to utilise the new VAT Deferral Payment Scheme.

 

  1. So What Are My Options?
  • If you deferred the payment of VAT owed to HMRC between 20 March and 30 June 2020, you can:
    • pay the deferred VAT in full on or before 31 March 2021, or
    • opt in to the VAT deferral new payment scheme when it launches in 2021, or
    • contact HMRC if you need more help to pay

 

  1. What Does The New Payment Scheme Allow?
  • The Scheme will allow you to:
    • pay your deferred VAT in instalments without adding interest;
    • select the number of instalments from 2 to 11 equal monthly payments;
  • So, instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest-free.
  • All instalments must be paid by the end of March 2022

 

  1. Am I Eligible For The Scheme?
  • To use this Scheme you must:
    • still have deferred VAT to pay
    • be up to date with your VAT returns
    • be able to pay the deferred VAT by Direct Debit
  • If you opt in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.

 

  1. If You Want To Opt In To The New Payment Scheme?
  • You cannot opt in yet;
  • The online opt in process will be available in early 2021;
  • You must opt in yourself, your agent cannot do this for you

 

  1. Do I Need To Be Doing Anything To Get Ready To Opt In?
  • Before opting in you must
    • create your own Government Gateway account if you don’t already have one

https://www.gov.uk/log-in-register-hmrc-online-services

  • submit any outstanding VAT returns from the last 4 yearsyou will not be able to join the scheme if you have not done so;
  • correct errors on your VAT returns as soon as possible – corrections received after 31 December 2020 may not show in your deferred VAT balance

 

  1. What If I Am Not Eligible For The New Payment Scheme?
  • You can contact HMRC to discuss the possibility of entering alternative time to pay options;

 

  1. Want To Consider Your Options?
  • Should you require any additional advice, please do not hesitate to contact one of the Partners or Jo Travis.

Barrons has put together a helpful guide to running your business during the coronavirus crisis.