The VAT deferral scheme deadline is looming. Find out what you need to do to avoid penalties.
Businesses that deferred the payment of Vat last year due to Coronavirus have until 30 June 2021 to either pay or arrange instalments to avoid a 5% penalty.
- If full payment is made by 30 June 2021 no penalties or interest will be charged.
- Where businesses cannot pay in full, an application can be made to opt-in to the new VAT deferral payment scheme which must be done online by 21 June 2021.
- Alternatively, arrangements can be made direct with HMRC (by calling 0800 024 1222) for time to pay by 30 June 2021 ( this cannot be done online)
What is the new VAT deferral scheme payment structure?
Businesses joining the scheme by the 30th June deadline will not be charged a penalty and will be able to pay their deferred VAT in two to eight interest-free instalments. The first instalment is payable upon joining the scheme.
There are various conditions for joining the scheme including being up to date with filing VAT returns and agreeing to pay the instalments by direct debit.
If you wish to join the VAT deferral scheme you can Apply here. You will need your Vat number to hand.
What if I cannot afford the instalments?
Where businesses do not have the cash flow to cover either full payment or an 8-month option, contacting HMRC by 30 June 2021 to agree on a time to pay arrangement will avoid the 5% penalty. However, the key difference is that the VAT repayments will not be interest-free.
Similar to the VAT deferral new payment scheme, businesses will need to be up to date with filing their returns and expect to make their monthly payments by direct debit.
If you are unsure about the VAT deferral scheme deadline and have any questions, get in contact with us.
