On February 11th, HMRC announced that they will be launching a new scheme, designed to assist with businesses’ cash flow, as part of their ongoing COVID-19 support. This scheme will allow businesses to defer their VAT liabilities generated between March 20th and June 30th 2020.
In this blog we take a look at the new scheme, explain how it works, how to get yourself registered and what else you need to be aware of.
How does the VAT deferral scheme work?
The full deferred VAT payment was expected by HMRC by March 31st 2021, but HMRC have now introduced the VAT deferral scheme which allows business owners to pay any outstanding amounts in a more manageable way.
The scheme will be available from February 23rd and will run until June 21st 2021, and once you’ve registered and your business has been accepted by HMRC, you’ll then be able to pay any deferred VAT, interest free in equal instalments. You can also choose the number of instalments you make, between two and eleven, depending on when you register your business.
What’s the process to register your business?
Simply visit gov.uk to register. It’s strongly advised that you set up your government gateway account asap, thus allowing you to make the maximum amount of instalments. The sooner you do this the more instalments you’re able to make (up to a maximum of eleven).
Do note that you’ll also be required to add the VAT account which will need a code, which is sent to you via post. Therefore with all this taken into consideration the sooner you can complete this process, the better.
Are there any other ways you can register?
If you’re unable to get online then you are able to ring HMRC’s COVID-19 helpline, on 0800 024 1222 once the scheme has officially opened.
If you have an accountant, are they able to do this on your behalf?
Sadly no, you are the only person who is able to do this.
What other prerequisites are there?
To qualify for the scheme you must:
- Still have deferred VAT to pay
- Have four latest up-to-date VAT tax returns
- Have joined the scheme no later than July 21st 2021
- Pay the first instalment when joining
- Pay all subsequent instalments via direct debit
If you’re currently using any other HMRC payment arrangements, such as Time to Pay or any other outstanding tax or other debts, you’re still able to use this new scheme.
What happens if your business is on the VAT Payment on Account Scheme or the VAT Annual Accounting Scheme?
You’ll still be able to use the new scheme, but rather than registering yourself, you will be invited to join later on in March 2021.
What’ll happen if you don’t pay by March 31st, join the new scheme or arrange any additional support with HMRC?
You may face a payment penalty or interest.
How can Aardvark Accounting help?
Keeping up with the latest from HMRC can seem a little daunting, especially if they’re speaking a language few can understand. Let our director-level accountants translate it for you, providing a clear path to what’s available to you as a business owner, and get you to where you want to be. No confusion or fear of missing out, just smooth sailing knowing your best interests are at heart. Get in touch today to find out more.