During the early stages of the first lockdown, the Government gave the option to defer your forthcoming VAT bill until later in the year. This allowed you to put that VAT income to good use, propping up your cashflow during the lean times of the initial business shutdown.
While this VAT deferral may have been a lifeline at the time, the time has now come to pay that VAT bill. Fortunately, you can opt-in to a new payment scheme, allowing you to spread the cost.
Making use of the VAT deferral payment scheme
If you had VAT that was due for all accounting periods ending between 29 February 2020 and 30 April 2020 inclusive, this payment could be deferred until 31 March 2021. The good news is that this amount can now be further spread, interest-free, over two to eleven equal monthly instalments.
The maximum number of payments depends on when you join the scheme:
- By 19/03/2021 up to 11 instalments
- By 21/04/2021 up to 10 instalments
- By 19/05/2021 up to 9 instalments
- By 21/06/2021 up to 8 instalments
The new payment scheme will be open from 23 February to 21 June 2021. You’ll need to opt-in if you want to take advantage of this further deferral.
Some key points regarding the scheme to note:
- The number of instalments includes the first payment that will be taken when you join the scheme.
- You will need to opt-in to the scheme yourself; as your adviser, we can’t do this on your behalf, even if we are registered as your agents for VAT.
- You’ll need a Government Gateway account to opt-in, so either log in to your existing account or (if you don’t have one) set up a new account.
- To qualify, all outstanding VAT returns from the last four years should have been submitted and any outstanding error corrections made.
- If you want, you can make payments towards the amount deferred, so that the subsequent instalments required will be smaller.
Talk to us about paying your deferred VAT
If you’d like to understand more about the new VAT deferral payment scheme, please do get in touch with your questions and queries.
Remember, as your agent, we can’t opt into the scheme for you, but we can advise you on your VAT position, how to set up a Government Gateway account and the cash flow impact of making these monthly deferral payments.