Deferred VAT payments update

Dear Members,

Please see below update on VAT deferred payments


For businesses who deferred their VAT liability last year (Feb-Mar-Apr 2020 returns), the business now has a few options:

Option 1
Pay the full amount of deferred VAT by end of March 2021, no interest charged/no penalties.  Payment can be made by electronic banking.

Option 2 
Enrol for the “VAT deferral payment scheme”, businesses have until 21st June 2021 to enrol but the sooner they enrol the more monthly instalments they can have.  No interest or penalties charged.

If you enrol by 19th March 2021 you get 11 monthly instalments, if you enrol by 19th April 2021 you get 10 monthly instalments and so on until the last enrolment date of 21st June 2021 and this gets you 8 instalments.  So it depends upon the business as to when to enrol/what instalments it wishes to pay.

Option 3
Enrolment is via the government gateway/HMRC portal and tax agents cannot enrol via their own tax agent login.  Enrolment is straight forward but instalments are paid via direct debit and so upon enrolling for the scheme, the first payment will be required, this is why tax agents cannot do this via their agent login because the scheme requires banking authority.  If the business does not have a UK bank account (i.e. overseas business) then it can contact HMRC via a dedicated telephone line to make arrangements.

Option 4
The business must have an up-to-date VAT account, that is, no outstanding VAT returns and only the deferred VAT period remaining unpaid.  If the business has a current “time to pay” agreement then that does not affect enrolment to the scheme.

Option 5
If the business requires a much longer payment plan than offered by this deferral payment scheme, then businesses can contact the Business Payment Service and negotiate a longer ‘time to pay plan’, typically of 12-24 months depending upon the financial state of the business but note that time to pay agreements do incur interest charges, whereas the deferral scheme does not.

For HMRC guidance on the scheme and how to apply click  here .

This Update was supplied by Jason Croke – Directot VAT at Rainer Essex

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