All VAT registered businesses were able to take advantage of deferring their VAT payments for amounts that were due to be paid in the period between 20th March 2020 to 30th June 2020. No interest or penalties were to be charged and businesses were free to pay the amount up at any time as long as it would be paid before 31st March 2021.
HMRC are now asking businesses to pay any outstanding amounts in full by 31st March 2021. If there are cashflow issues that will cause businesses issues in making payment they can contact HMRC to arrange a payment plan to spread the payment over 11 month instalments ending in January 2022. Interest will accrue on any unpaid VAT at a rate of 2.6% from 1st April 2021.
To arrange the payment plan HMRC are opening an online portal which will go live on the 23rd February 2021 and will remain open until 21st June 2021. The business owner/director must access this portal themselves. A requirement of the payment plan is to set up a Direct Debit to make the payments, therefore, as Direct Debits can only be authorised by the owner/director an Agent cannot do this on the businesses behalf.
Conditions for the scheme
Before you join the scheme
- create your own Government Gateway account (if you do not already have one)
- submit any outstanding VAT returns from the last 4 years – otherwise you will not be able to join the scheme
- correct errors on your VAT returns as soon as possible
- make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid
If you cannot use the online service
There may be circumstances where you cannot use the online service, for example if you:
- do not have a UK bank account
- cannot pay by Direct Debit
- have dual signatories on your account
If you want to join the new payment scheme, but cannot use the online service, contact the COVID-19 helpline when the scheme opens on Telephone: 0800 024 1222. An adviser will help you join.