The deadline to pay deferred VAT or arrange a payment plan is “fast approaching”, the Institute of Chartered Accountants in England and Wales (ICAEW) has warned.
Businesses who deferred VAT in the wake of the coronavirus pandemic must take action before 30 June 2021 or risk penalties.
If your company has outstanding VAT liabilities, here’s what you need to know.
What is the VAT deferral scheme?
VAT-registered businesses could defer VAT payments between 20 March and 30 June to support cash flow during the height of the coronavirus pandemic.
The resulting liability was initially deferred until 31 March 2021, but a further deferral was announced in September 2020 giving businesses until 30 June 2021 to repay.
What are my options?
Businesses have two options. Pay their deferred VAT liability in full by 30 June 2021 or arrange a payment plan by the same date.
The new online VAT Deferral New Payment Scheme, which launched in February, enables businesses to spread out their liabilities over eight to 10 monthly interest-free instalments, depending on when they apply.
To get started, simply click this link and have your VAT registration number and Government Gateway ID handy.
What is the penalty for non-compliance?
Businesses could be fined up to five per cent of their total VAT liability if they do not register or pay in full by 30 June 2020, HM Revenue & Customs (HMRC) has confirmed.
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