Back March 2020, when Covid first locked down the UK, HMRC announced that they would allow business owners to defer VAT payments due between 20 March 2020 and 30 June 2020 to 31 March 2021, helping struggling businesses during the pandemic.
This came as welcomed news to many businesses operating across a diverse range of sectors, with many taking advantage of the deferment scheme in order to better manage cash flow during what has proved to be a challenging year for all.
But what happens if you still haven’t managed to pay your deferred VAT payments?
We don’t want VAT confusion to be an added worry on your plate. As we’re now approaching the deadline, we want to make sure you understand:
There are currently three payment options available if you have struggled to pay your VAT…
- Pay in full: If you have the cash available to pay the full amount due, you can make the payment in full.
- Pay in instalments by 2022: If you are unable to pay the money you owe in full by 31 March 2021, you can opt in to pay the full amount over 11 monthly instalments and this is interest free.
- Choose your instalments to pay by 2022: You can either split the full payment into larger chunks or select the number of instalments that you are able to pay in.
If you’re not in a position to pay the full amount of VAT upfront at the moment, there are also a few qualifying conditions for deferring to 2022 including:
- Pay your first instalment when you opt in to the scheme
- Still have deferred VAT to pay
- Be up to date with your VAT returns
- If you use the scheme you can still have time-to-pay arrangements in place with HMRC for other debts and outstanding taxes.
Of course, If you do not have the funds to pay the balance in full or in instalments, you should contact HMRC to discuss your options. This is not as daunting as you might think and HMRC will help to identify a repayment option that best suits your circumstances.
Why choose React Accountancy?
Here at React Accountancy, we provide trusted accountancy services to start-up, established and multi-national businesses across a diverse range of industries.
From the moment you get in touch, our approachable, friendly and professional team will go above and beyond to ensure that you receive the right advice, support and accountancy solutions for your business.
All of our team has years of experience in providing accountancy services that support your business including complex financial issues.
Get in touch today for further information about any of our services.
You can reach us on 01914324110 or contact us via email using firstname.lastname@example.org