Businesses that want to pay deferred VAT in instalments throughout the 2021/22 tax year must register for a new scheme by 31 March 2021, it has been confirmed.
The new initiative comes after businesses were allowed to temporarily defer VAT payments this year to ease cash flow worries and support recovery in response to the coronavirus pandemic.
Under the VAT deferral scheme, struggling businesses could defer VAT payments between 20 March and 30 June 2020, but the deferred liabilities must be paid by 31 March 2021.
However, the new VAT deferral payment scheme will allow businesses to opt in to make up to 11 smaller monthly interest-free payments throughout the 2021/22 tax year, instead of paying the full amount by the end of March 2021.
It is believed the scheme will open from “early 2021” and close for new applications by 31 March 2021.
Before opting in, businesses will need to submit any outstanding VAT returns from the last four years and calculate how much they owe, including the amount deferred and how much is left to be paid.
Alternatively, businesses can contact HMRC if they need more time to pay.
For help and advice on related VAT issues, please get in touch with our expert tax team today.
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