New VAT payment scheme to help your cashflow

December 9th, 2020     Tax News

HM Revenue and Customs (HMRC) will shortly be introducing a new scheme to help VAT registered business pay the VAT that they deferred (that was due between 20 March and 30 June 2020) by instalments. Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022.

The scheme will allow you to:

• pay your deferred VAT in instalments without adding interest
• select the number of instalments from 2 to 11 equal monthly payments

To use this scheme you must:

• still have deferred VAT to pay
• be up to date with your VAT returns
• be able to pay the deferred VAT by Direct Debit

If you opt in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.

This scheme isn’t live yet but you can get ready for it, before opting in you must:

• create your own Government Gateway account if you don’t already have one
• submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
• correct errors on your VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in your deferred VAT balance
• make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

You should also:

• pay what you can as soon as possible to allow us to show the correct deferred VAT balance
• consider the number of equal instalments you’ll need, from 2 to 11 months

Check back with us for updates when the scheme becomes live.

Looking for help with cashflow, profitability or tax in these difficult times? Give us a call on 01803 296678 to see if we can help you.

If you’re worried about the January tax cashflow hit you may be interested in finding out what help there is here, Are you ready for the January tax cashflow hit?