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VAT Deferrals Reminder – Deadline 21st June 2021
The final 21 June 2021 deadline for joining the VAT deferral scheme is on Monday. We are encouraging members to check that you have chosen the best payment method that suits your business.
‘To support businesses during the COVID-19 crisis, the Government announced on 20 March 2020 that all UK VAT registered businesses would have certain VAT payments deferred automatically until end of March 2021, with no application or notification of HMRC required. A new payment scheme between 23 February and 21 June was subsequently set up as lockdowns continued.
This scheme is due to end shortly which means the deferred payments will be due in full on 30 June unless businesses have chosen to make payments in instalments. As the final 21 June 2021 deadline for joining the scheme is fast approaching, we are encouraging members to check that you have indeed chosen the best payment method that suits your business.
The VAT deferral new payment scheme – how it works:
HMRC’s guidance details that instead of paying the full deferred amount, the new payment scheme allows businesses to make smaller monthly instalments, interest free. Businesses can select the number of monthly instalments they wish to make (up to a maximum of 8 – if you joined between 20 may and 21 June) and all instalments must be paid by the end of March 2022. The first instalment is payable at the time of joining the scheme, and subsequent instalments have to be made in consecutive months.
How to sign up for the new payment scheme?
Online sign up for the new payment scheme is available for most businesses until the 21 June 2021 deadline. Please note that businesses on the VAT Annual Accounting Scheme or Payment on Account Scheme were only able to join the scheme from 10 March 2021.
In order to join the scheme, businesses have to be up to date with their VAT returns and be able to pay by direct debit.
As the scheme requires a direct debit to be set up, businesses must opt in themselves and agents cannot do this on their behalf.
Before opting in, businesses must:
- create your own Government Gateway account if you don’t already have one
- submit any outstanding VAT returns from the last four years
- correct errors on your VAT returns as soon as possible
- decide the number of equal instalments you wish to make
- make sure you know how much you owe, including the amount originally deferred and how much you have already paid; and
- be ready to make your first instalment payment.
If a business wants to join the new payment scheme but cannot use the online service (for example because they do not have a UK bank account, can’t pay by direct debit or have dual signatories on their account) they should contact the COVID-19 helpline when the scheme opens on 0800 024 1222.
More information can be found in HMRC’s guidance. You can contact HMRC on 0800 024 1222 by 30 June 2021 if you need more help to pay. Failure to make arrangements to pay by instalments may result in interest or a 5% penalty being charged.
You can sign up here: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19 ‘