Deferred VAT
One of the early tax breaks to help businesses dealing with coronavirus was the ability to defer VAT due due in the period 20 March 2020 to 30 June 2020. In practice that means the VAT returns for February, March or April 2020.
This VAT was only ever deferred and now you need to plan how you will pay it. Here are the choices you’ve got.
- Pay the VAT in full by 31 March 2021
If you pay the VAT due by 31 March 2021 then you don’t need to contact HMRC. Just pay the VAT as normal using your VAT number as the reference. - Apply to join the VAT Deferral Payment Scheme
You can apply to pay the VAT owed by interest free instalments. All the VAT owed needs to be paid by 31 March 2022 so the sooner you join the more months you can spread your payments over. For example, join by 19 March 2021 and you get to spread it over 11 payments. If you join by 21 June 2021 then you only spread it out over 8 payments. The deadline for joining the scheme is 21 June 2021. If you miss that deadline than HMRC will expect payments in full and charge interest.
You have to apply for the VAT Deferral Payment Scheme using your own Government Gateway account. Your accountant can’t do this for you.
You pay your first payment when you join the scheme and you must pay the others by direct debit.
You must be up to date with your VAT returns to be eligible.
You can join the scheme here.
