Businesses which deferred VAT payments between 20 March 2020 and 30 June 2020 can either pay the deferred VAT in full on or before 31 March 2021 or opt to spread the liability over 2 to 11 interest-free payments up to 31 March 2022. This is known as the New Payment Scheme, and HMRC has released guidance on how taxpayers will be able to sign up for this in early 2021. This sign up must be done by the business itself through their own Government Gateway account, not by us as agent.
To be able to use this 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
- Opt in and pay the first instalment by 31 March 2021.
It should be noted that HMRC states that voluntary disclosures in respect of VAT errors in the deferred period should ideally be submitted by 31 December 2020, to enable the deferment balance to be updated. Realistically, in view of the Christmas holiday period, business should aim to do so by 18 December 2020.
Businesses that opt in to the scheme will still be able to request a Time To Pay arrangement for other HMRC debts and outstanding tax.