As part of the Covid-19 support measures, the UK government allowed payments of VAT due between 20 March 2020 and 30 June 2020 to be deferred. Those deferred VAT payments were due to be paid in full by 31 March 2021. However, for taxpayers wanting to repay their deferred VAT in instalments and free of interest, registration for the instalment system opened on 23 February 2021. Taxpayers wishing to take advantage of the instalment scheme need to sign up by 21 June at the latest.
“The application window for paying VAT deferred under the Covid-19 VAT deferral scheme by instalments closes on 21 June, so move fast if you need to take advantage of that.” That’s the message to rural businesses from Martyn Dobinson, Partner at Saffery Champness, and a member of the firm’s Landed Estates and Rural Business Group.
Those yet to join, but joining the scheme before 21 June will be able to opt to pay in eight instalments. Joining the scheme is through the gov.uk website.
To register, taxpayers must:
- Know their VAT registration number.
- Create a Government Gateway account (if they do not already have one).
- Submit any outstanding VAT returns from the last four years.
- Correct any errors on their VAT returns as soon as possible.
- Make sure they know how much they owe, including the amount they originally deferred and how much they may have already paid.
To use the online service, taxpayers must:
- Join the scheme themselves, an agent/accountant cannot do this for them.
- Still have deferred VAT to pay.
- Be up-to-date with their VAT returns.
- Join by 21 June 2021.
- Pay the first instalment when they join.
- Pay their instalments by Direct Debit (there is an alternative entry route for those unable to pay by Direct Debit).
Martyn Dobinson added:
“Those with deferred VAT outstanding, and who don’t register for the instalment scheme by 21 June, may still be able to come to an arrangement with HMRC under the Time to Pay scheme, but must contact HMRC by 30 June 2021 to do so. Penalties will be avoided in those cases, but interest will still be due.
“If deferred VAT is not paid in full by 30 June 2021, the taxpayer has not successfully registered for the instalment scheme or contacted HMRC to make another arrangement, a 5% penalty or interest may be charged on the outstanding amounts.”