HMRC have published some further details on the new VAT Time To Pay scheme which forms part of the support package, along with taxable grants, designed to assist business owners and the self-employed throughout this difficult period.
Essentially, anyone who deferred VAT between 20 March and 30 June 2020 with outstanding payments, must either pay the deferred VAT in full by 31 March 2021, or opt in to the VAT deferral new payment scheme, which will launch in 2021. HMRC have also asked business owners to contact them if further help is needed to pay the outstanding balance. HMRC have not given a specific date yet for the launch of the new scheme, but this will be available in early 2021 when you will be able to opt in online. It is also important to note that this must be done in person and not by an agent.
How will the new Time To Pay scheme work?
Instead of paying the full amount by the end of March 2021, you can instead make from two up to a maximum of 11 smaller monthly instalments, interest free. All instalments must then be paid by the end of March 2022.
Who is eligible?
The scheme will be available only to those who:
- still have deferred VAT to pay
- are up to date with VAT returns
- can pay the deferred VAT by Direct Debit
HMRC have also stated that If you opt in, you can still have a Time To Pay arrangement for other HMRC debts and outstanding tax.
Preparation is vital
To benefit from the scheme, it important to organise your accounts beforehand. HMRC have provided the following checklist:
- create your own Government Gateway account if you don’t already have one
- submit any outstanding VAT returns from the last four years (you will not be able to join the scheme if you have not done so)
- correct errors on your VAT returnsas soon as possible (corrections received after 21 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 will need, from 2 – 11 months
Please take the time assess whether you can benefit from the new Time To Pay scheme and do not hesitate to contact us should you need any further assistance. We are here to help.