More time to pay back deferred VAT and tax
At the start of the pandemic, the following options were available:
VAT registered businesses could defer VAT payments that fell due in the period from 20 March 2020 to 30 June 2020. Self-assessment taxpayers could delay their second payment on account for 2019/20, due by 31 July 2020.
In his Winter Economy Plan, the Chancellor extended the deadlines by which the deferred tax must be paid.
VAT-registered businesses who took advantage of the opportunity to delay paying VAT were originally required to pay the deferred VAT by 31 March 2021. However, there is now another option for those for whom this presents a challenge. They can now opt to pay the deferred VAT in smaller equal instalments up to the end of March 2022. Those wishing to take advantage of this option need to opt into the scheme. If they fail to do so this will mean that the VAT owed will need to be repaid by 31 March 2021. Any business who is able to can if they so wish pay the deferred VAT in full by 31 March 2021.
Depending on the business’ VAT quarter dates, deferred VAT will relate to the quarter ending 29 February 2020, the quarter ending 31 March 2020 or the quarter ending 30 April 2020. VAT due after 30 June 2020 (i.e. for the quarter to 31 May 2020 and subsequent quarters) must be paid in full and on time. Where direct debits were cancelled, these should be reinstated if this has not already been done.
Regardless, the deferred VAT will need to be paid in addition to the usual VAT payments and should be budgeted for.
Self-assessment taxpayers could originally delay paying their second payment on account for 2019/20 due by 31 July 2020. They could instead pay it by 31 January 2021, along with any 2019/20 balancing payments and the first payment on account due for 2020/21. For some taxpayers who have been affected financially by the pandemic, this will be something of a stretch. In recognition of this, these taxpayers can set up an automatic time to pay arrangement online, providing their balance is less than £30,000.
For any further queries, you can contact us directly on 028 9032 9255 or by email firstname.lastname@example.org.