Deferred VAT repayment options explained 

The time is fast approaching for VAT registered businesses to pay the price for one of the initial coronavirus concessions announced by the Government: deferred VAT. 

Businesses were permitted to defer VAT liabilities falling due between March and May to ease the financial pressures placed on businesses by the first lockdown. HMRC have given business owners two repayment options:

Pay deferred VAT in full

Pay the VAT in full, on or before 31 March 2021. Payment can be made via the HMRC website by bank transfer or debit/credit card, but please remember to pay from your business bank account, not your personal account.

Pay deferred VAT in instalments

The second option is to pay the deferred VAT in equal instalments over the next 12 months, with no interest charges. This gives major cash flow advantages to those managing their way out of the pandemic.

Details of the repayment scheme are listed below:

• The scheme opens on 23 February and closes on 21 June 2021.
• To maximise the number of instalments available (11), businesses must join the scheme by 19 March 2021. The table below outlines the deadlines for the maximum number of instalments.

• Businesses can choose the number of instalments suitable for them, from 2 to 11, depending on when they join the scheme.
• Accountants are barred from making this election on behalf of clients.
• The first instalment is payable on joining the scheme.
• Future payments will be taken by direct debit.
• We understand that that the scheme will be available via www.gov.uk

To be eligible to apply for the instalment scheme businesses must ensure:

• They have their own Government gateway
• All VAT returns for the previous four years have been submitted
• Errors on previous VAT returns be corrected as soon as possible; and
• The business understands how much they owe HMRC, the amount deferred and if any amounts have been paid already.

As noted above, accountants are unable to perform this task on behalf of their clients. However, we are happy to discuss the ways we can assist and guide you through the process.

Businesses will be charged penalties if they fail to either sign up for the new scheme, pay their VAT in full or agree on a payment plan with HMRC by 30 June 2021.

To discuss the businesses options further, please contact your Accounts Manager or a member of our Tax Team on 0161 370 9600 or info@chadwickandco.co.uk

We provide an efficient, cost-effective VAT service for a broad range of companies, from new start-ups, through to large multi-site operations. If you want to find out more about our work and the other services we offer, you can read more here.