As the Covid-19 outbreak hit its first peak and the UK entered its initial nationwide lockdown, HMRC offered business owners the option to defer VAT payments due between March 20 and June 20, 2020. Deferral was available to all UK VAT registered businesses (including non-established taxable persons) and was given automatically, with no application or notification of HMRC necessary.

 

Now, as the deadline for payments looms on March 31st, HMRC has published guidance for taxpayers. There are three options for making your deferred payments – each outlined below.

 

Pay your deferred VAT

If you are able to pay your deferred VAT in full by March 31st, 2021, you can do so via online or telephone banking, CHAPS, direct debit, BACS, standing order, by debit or corporate credit card online, or at your bank or building society.

 

It’s important to make sure your payment will reach the HMRC bank account by the deadline – you can use the VAT payment deadline calculator to work out how much time to allow depending on your payment method.

 

You do not need to notify HMRC if you intend to pay your deferred VAT by this deadline.

 

Opt-in to the new payment scheme

Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free, to pay off your VAT bill. All instalments must be paid by the end of March 2022, and you have the option to select the number of equal instalments (between two and 11) you intend to pay over.

 

To use this scheme, you must:

  • Be up to date with your VAT returns
  • Opt in before the end of March 2021
  • Pay the first instalment before the end of March 2021
  • Be able to pay the deferred VAT by direct debit

 

Before opting into the scheme, you need to have a Government Gateway account set up and ensure any outstanding VAT returns are submitted and any errors corrected. You should also know how much you owe, including the amount you originally deferred, any payments you have made, and considering the number of instalments you intend to pay over.

 

If you are not able to pay your deferred VAT

If you’re unable to pay and need more time, HMRC offers a variety of payment options and support – full details are available at www.gov.uk/difficulties-paying-hmrc and by contacting HMRC.

 

If you need help arranging your deferred VAT payments, our team are on hand. Get in touch on 01642 244090 or info@chuhanandsingh.co.uk.