Deferred VAT Penalties
We’ve talked before about the COVID VAT Deferral Payment Scheme, which enables businesses to spread the payments of VAT that was deferred from the first quarter of 2020. HMRC has now confirmed the penalty that companies will be charged who do not pay any Deferred VAT in full or make an arrangement to pay by 30th June 2021.
Businesses will be liable for a 5% penalty or interest if they haven’t either paid or made an arrangement to pay by this date.
How to join the VAT Deferral Scheme
- The online scheme opened on the 23rd February 2021, and closes again on the 21st June 2021.
- The scheme lets you spread the cost of your deferred VAT, in equal instalments, without paying interest.
- The number of instalments to be paid will depend on when you join the scheme.
- It is important to note the following criteria:
- You must be up to date with your VAT returns.
- You must join the scheme yourself, we cannot do this for you.
- The scheme closes to new members on 21 June 2021.
- You must pay the first instalment when you join.
- You have to pay instalments by direct debit.
- If you join the scheme, you can still have a Time to Pay arrangement for other HMRC debts and outstanding tax.
Join early to spread your VAT over the most instalments!
The number of instalments you can spread your VAT over will reduce as each month passes, reducing to just 8 instalments if you join just before the scheme closes on the 21st June. The total amount of VAT must be paid by March 2022.
If you haven’t already done so, you can register for the scheme here.
If you have any problems with registering for the scheme, or questions around the scheme or your VAT affairs, please get in touch.
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