VAT deferral scheme deadline is imminent
Following the Government’s package of support in response to the Covid-19 pandemic, any business that used the VAT deferral scheme in 2020 now has less than two weeks to make their intentions for repayment known.
Over half a million businesses deferred £34 billion in VAT payments between March and June of last year, with £15.1 billion already paid back in full, but for those who were unable to do so have had from 23rd February 2021 to apply to repay their VAT in instalments. Since this online service opened, a further £11.5 billion has been entrusted through committing to future instalments.
What are the consequences if you miss the cut-off?
The payments due under the VAT deferral scheme were strictly due by 31 March 2021. However, HMRC introduced its “VAT deferral new payment scheme” in order to allow businesses to spread the cost by instalments. This will assist the recovery of the economy through allowing businesses to better manage their cash flow during what could be for many quite critical times as the country reopens after a third lockdown.
Any business wanting to use the new scheme must enrol by 21 June, but now the maximum number of instalments has been reduced from 11 to 8.
If a business has deferred VAT and misses the deadline, it must pay in full by 30 June 2021 to avoid a 5% penalty on the outstanding amount.
However, should a business be struggling to make payment they should contact the Payment Support Service on 0300 200 3835 before 30 June 2021 to try to agree an alternative arrangement.