Taxpayers face an increase in their National Insurance contributions (NICs) and dividend tax rates from…
Companies that signed up to the VAT deferral scheme have been warned they face a five per cent penalty if they do not make payment arrangements by 30 June this year.
Over half a million businesses deferred VAT payments last year. HM Revenue & Customs (HMRC) has confirmed that companies will be liable for the penalty or interest if they do not pay in full or make an arrangement to pay the deferred VAT by that date.
At the start of the COVID-19 pandemic, the Government announced a three-month deferral of VAT payments for the first tax quarter of 2020, and payments for outstanding VAT are now due.
Companies that deferred VAT payments due between 20 March 2020 and 30 June 2020 can either pay the deferred VAT, join the VAT Deferral New Payment Scheme or make other arrangements with HMRC by 30 June 2021. The online VAT Deferral New Payment Scheme opened on 23 February 2021 and is available until 21 June 2021.
The VAT Deferral Payment Scheme allows taxpayers to schedule payments monthly. The scheme lets you pay your deferred VAT in equal instalments, interest-free and choose the number of instalments by direct debit, from two to 11 (depending on when you join).
For example, if you join by 19 May 2021, you will make nine instalments and if you join by 21 June 2021, you will make eight instalments.
You cannot include extra payments after you’ve joined the scheme.
To take part, HMRC says you must:
- Join the scheme yourself, your agent cannot do this for you
- Still have deferred VAT to pay
- Be up to date with your VAT returns
- Join by 21 June 2021
- Pay the first instalment when you join
- Pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)
The new payment scheme is part of a wider Government package of support, now worth more than £400 billion, which is helping to protect millions of jobs and businesses during the pandemic.
Half a million businesses made use of the VAT deferral last year, which helped to inject an estimated £34 billion into the UK economy. The new payment scheme will continue to help the economy recover by enabling businesses, impacted by the pandemic, to manage their cash flow at a critical time.
Eligible businesses that are unable to use the online service can ring the HMRC Coronavirus Helpline on 0800 024 1222 to join the scheme or make alternative arrangements to pay until 30 June 2021.