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The new payment scheme has been available since February 2021 and will remain so until late June 2021. It has a portal that enables businesses to pay their deferred VAT in instalments by direct debit, with the first instalment made in the month that the business opted into the scheme. After that, payments are made in equal monthly instalments. The scheme is designed to avoid a “cliff edge” at the end of March 2021 for businesses which deferred VAT.
Businesses can opt into the new payment scheme in March, April, May or June, but the later they opt in, the fewer instalments they are allowed to make. The opt-in date must be sufficiently early in the month to allow the first payment to have reached HMRC by the end of that month. There must be at least two instalments paid but you can pay in fewer instalments if you wish or alternatively settle your entire debt in one go under normal payment methods.
The Budget announcement provides that legislation will be introduced in the Finance Bill for a penalty of 5%, chargeable in relation to the amount of the deferred VAT that is outstanding if businesses have not paid in full, opted into the new payment scheme, or made an alternative arrangement to pay by 30 June 2021. The normal Default Surcharge regime for late paid VAT will not apply to deferred VAT.
If your business has deferred VAT payable up to 31 March 2021, you should decide now how you will repay the tax owed to HMRC to allow time to pay in numerous instalments if required.
The new payment scheme has been available since February 2021 and will remain so until late June 2021. It has a portal that enables businesses to pay their deferred VAT in instalments by direct debit, with the first instalment made in the month that the business opted into the scheme. After that, payments are made in equal monthly instalments. The scheme is designed to avoid a “cliff edge” at the end of March 2021 for businesses which deferred VAT.
Businesses can opt into the new payment scheme in March, April, May or June, but the later they opt in, the fewer instalments they are allowed to make. The opt-in date must be sufficiently early in the month to allow the first payment to have reached HMRC by the end of that month. There must be at least two instalments paid but you can pay in fewer instalments if you wish or alternatively settle your entire debt in one go under normal payment methods.
The Budget announcement provides that legislation will be introduced in the Finance Bill for a penalty of 5%, chargeable in relation to the amount of the deferred VAT that is outstanding if businesses have not paid in full, opted into the new payment scheme, or made an alternative arrangement to pay by 30 June 2021. The normal Default Surcharge regime for late paid VAT will not apply to deferred VAT.
If your business has deferred VAT payable up to 31 March 2021, you should decide now how you will repay the tax owed to HMRC to allow time to pay in numerous instalments if required.
For more information on the above, or for VAT advice tailored to your specific circumstances get in touch with our experts by filling out the form below.
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