It feels like the initial announcement of VAT deferrals in 2020 took place in a different age.
The permitted delay of VAT payments due between 20th March and 30th June 2020 was just one part of a rescuing rush of government motions designed to soften fiscal blows dealt by the pandemic.
Yet, three lockdowns, two furlough extensions and a truckload of grants and loans later, the original deadline of 31st March 2021 for making these delayed VAT payments is right around the corner.
And as, hopefully, so too is the beginning of the end of these turbulent times, the government has made another update on VAT deferrals that will provide some firms with one more vital boost.
The deferral payment scheme
Although businesses still have the option to pay their deferred VAT in full by 31st March 2021, the government has announced that eligible businesses can join a new VAT deferral payment scheme.
This new scheme will allow firms to pay their deferred VAT in equal instalments, all delightfully interest-free.
Those who opt to use the new scheme, which will function in the form of an online service that will be open between 23rd February and 21st June 2021, can choose the number of instalments they would like to pay their deferred VAT in, depending on how soon they join.
Who can take advantage of this
Businesses that are already on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme will be invited to join the new payment scheme ‘later in March 2021’.
Any other businesses wishing to join the new payment scheme must:
Join the scheme themselves and not do so via an agent
Still have deferred VAT left to pay
Be up to date with their VAT returns
Pay the first instalment when they join
Pay their instalments by Direct Debit or contact the COVID-19 helpline if they cannot
Join by 21st June 2021
Before joining the scheme, businesses must have or create a Government Gateway account, correct errors on their VAT returns as soon as possible, submit any outstanding VAT returns from the last four years and know how much of their VAT has been deferred.
How this affects you
If your business deferred VAT payments last year, the government’s new payment scheme offers a great way for you to protect your cashflow and avoid what may be a stinging one-off payment after months of depressed demand.
The government’s interest-free support packages have helped many businesses survive the pandemic thus far, and another interest-free offering displays once more that they are willing to take a hit to allow businesses to stand taller when this is all over.
How can we help you?
Although we are unable to enrol your business onto the new VAT deferral payment scheme, KBL Accounts are at hand to help you correct or compile VAT returns in preparation if you are considering joining the new scheme.