A&M Tax Advisor Update
The VAT Deferral Scheme was implemented by the UK Government last year with the aim of supporting businesses through Covid-19. The deferral applied to VAT payments due between 20 March 2020 to 30 June 2020 and businesses were given two options:
What does the new scheme consist of?
Many businesses are still struggling to settle tax payments due to Covid-19. Businesses unable to settle their deferred VAT by 31 March 2021 will be able to repay the outstanding amounts in equal instalments (interest free) and can choose the number of instalments, from 2 to 11 depending on when they join the scheme. For example, businesses joining on 19 March 2021, can apply to pay the deferred VAT in 11 instalments. The maximum number of instalments will gradually decrease the later businesses apply.
What are the requirements to opt-in?
To be able to join the scheme you will need to:
Joining the scheme online
The application online is a straightforward process. A ‘join the scheme now’ button has now been enabled within HMRC’s Guidance ‘Pay VAT deferred due to coronavirus (COVID-19)’. You will be required to enter your Government Gateway account details to start the application process.
To be able to apply online, you need to set up a Direct Debit with your UK bank account and Businesses must pay the first instalment upon joining the scheme. Further instalments must be settled by Direct Debit.
I am an overseas trader and I cannot set up Direct Debit. Can I still apply?
The answer is yes. If you cannot set up a Direct Debit arrangement, do not have a UK bank account or have dual signatories on your bank account, you can contact HMRC COVID-19 helpline on +44 (0) 800 024 1222. They will inform you about the most suitable option for you and provide you with the instructions to settle the instalments (e.g. by way of bank transfers).