Cashflow Considerations - Deferring Vat Payments

If under the relaxations for Covid 19, you deferred VAT during the first lockdown between 20 March and 30 June 2020 and still have payments to make, you can pay the deferred VAT in full on or before 31 March 2021 or opt in to the VAT deferral new payment scheme when it launches in 2021. If you wish to defer the payment under the new payment scheme you must opt in (you must do this yourself – your agent can not do it for you). The online opt in process will be available in early 2021. Under this new VAT deferral scheme, taxpayers can make up to 11 monthly instalments, interest free with all instalments required to be paid by the end of March 2022. A business can select the number of instalments from 2 to 11 equal monthly payments. Conditions of the scheme are that you must:

• still have deferred VAT to pay
• be up to date with your VAT returns
• opt in before the end of March 2021
• pay the first instalment before the end of March 2021
• be able to pay the deferred VAT by Direct Debit

If you opt in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax. To be eligible for the scheme businesses must submit any outstanding VAT returns from the last 4 years as access to the scheme may be blocked for those with outstanding returns. If any corrections need to be made to the returns on which VAT was deferred, HMRC warn that corrections received after 31 December 2020 may not show in the deferred VAT balance. Further information can be found here. For more advice contact Angela Keery, Tax Director Email angelakeery@bakertillymm.co.uk or Tel: 028 9032 3466