A few simple questions that could save you a nasty surprise….
- Are you VAT registered? If not, then this doesn’t apply to you, so no need to read further!
- Did you take the option to defer your VAT liabilities from the first quarter of 2020, i.e. payments which would have been due between 20 March 2020 and 30 June 2020. If not, then this doesn’t apply to you, so no need to read further!
- Have you already repaid the deferred amount? If you have, then this doesn’t apply to you, so no need to read further!
If you are still reading, then that means you still have to deal with the deferred VAT liabilities, and you need to act now!
HMRC recently confirmed that businesses would be liable for a 5% penalty or interest if they do not pay in full or make an arrangement to pay deferred VAT by 30 June 2021.
You can set up a monthly installment payment under the ‘VAT deferral notification service’ which is available until 21 June 2021. This payment scheme allows you to further delay payment by spreading the amount in equal instalments, interest free.
For example if you join by 21st April you will have 10 installments, if you join by 19th May 2021 you will have 9 installments and if you leave it until the 21st of June it will be only 8. Obviously the best option for cash flow is to wait until just before 21 June and then spread over the next 8 months, but the risk with being last minute is that a problem occurs and you miss the deadline and incur the penalties, so be careful!
To join you will need to sign in to your Government Gateway account and have your VAT Registration number with you.
The guidance informs us that we are unable to complete this for you; you will need to join the scheme yourself.
For more details, please visit: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19
If you have any questions please get in touch.