HMRC is still owed £2.7bn in deferred VAT payments from over 150,000 UK businesses who have not yet made arrangements to make the payment, originally due between March and June 2020.
Information released by HMRC through a Freedom of Information request (FOI) found that as of 30th June 2021, 9% of the total VAT that was deferred by businesses in the pandemic had not been paid.
Approximately 590,000 businesses used the scheme and took the opportunity to defer VAT payments to the value of £33.5bn between March and June 2020.
Of that total, £17.8bn has been paid back to HMRC and £13bn will be paid by monthly instalments.
Businesses who deferred their VAT had two primary options to make their payment:
- They were given until 31st March 2021 to pay back the VAT in full.
- They had until 30th June 2021 to make an arrangement through the VAT Deferral New Payment Scheme. The scheme allowed businesses to spread their payments across up to eight equal monthly instalments, interest-free.
HMRC has urged businesses who still need to arrange repayment to come forward sooner rather than later as businesses with unpaid liabilities will face penalties of 5% of the money owed, plus interest.
These figures will add to the growing concerns that the Government will struggle to recover vast amounts of the coronavirus support and tax breaks made available during the first lockdown. Some recipients have gone out of business while others are being pursued by HMRC debt collectors.
An HMRC spokesperson said: ‘HMRC will support any taxpayer in financial distress as a result of COVID-19 and any business that may struggle to pay its deferred VAT should contact us.’
‘Businesses had up to 30th June to make arrangements to pay their deferred VAT, so those who failed to take action should contact HMRC to pay what they owe. They may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and tailored to individual circumstances and liabilities.’
HMRC has said their priority is to help anyone with debt as much as possible.
If you’re struggling to pay your VAT, please do take HMRC’s advice and contact them to discuss an arrangement. Whilst the amount will still be due, ignoring it won’t help, and mitigating a 5% penalty and associated interest charges has to be a positive step! As ever, if we can help at all, please get in touch.