Any business that deferred VAT payments between 20 March 2020 and 30 June 2020 may need to act soon if they wish to use HM Revenue & Customs’ (HMRC) New Payment Scheme.
If a business did choose to defer VAT payments due to COVID-19 this year, they either have until 31 March 2021 to pay the deferred VAT in full or they can spread the liability over two to 11 interest-free payments up to 31 March 2022 using the scheme.
HMRC has now released new guidance on the New Payment Scheme, which explains how taxpayers can use the scheme from early 2021.
This confirms that to use the scheme a business must:
- Still have deferred VAT to pay;
- Be up to date with its VAT returns;
- Be able to pay the deferred VAT by Direct Debit; and
- Opt-in and pay the first instalment by 31 March 2021.
A full outline of the guidance can be found by clicking here.
HMRC states that voluntary disclosures in respect of VAT errors in the deferred period should be submitted by 31 December 2020, to enable the deferment balance to be updated.
If a business decides to opt-in to the New Payment Scheme it will not affect their ability to request a Time to Pay arrangement from HMRC for other debts and outstanding tax payments in future.
If you would like assistance with the New Payment Scheme or need to correct a VAT error, please speak to our team.