Businesses that deferred VAT payments last year have one month left to join the HMRC VAT deferral scheme online if they want to spread the cost by paying in monthly instalments.
The online portal for the VAT Deferral New Payment Scheme closes on 21 June 2021. Under the scheme, over half a million businesses deferred £34 billion in VAT payments due between March and June 2020. Businesses had until 31 March 2021 to pay this deferred VAT or they could go online from 23 February to set up a new payment scheme and pay by monthly instalments.
HMRC chief executive Jim Harra is urging businesses to "act now to avoid missing out on this opportunity to spread payment of their deferred VAT across monthly, interest-free instalments".
Jesse Norman, financial secretary to the Treasury, said: "More than half a million businesses were able to defer their VAT payment last year. This provided support at a critical time, protecting millions of jobs and businesses during the pandemic and injecting £34 billion into the UK economy. The VAT Deferral New Payment Scheme means businesses can now manage their cash flow by paying their deferred VAT more gradually."
The March, April and May joining dates have passed, but businesses can still spread their payments across up to eight equal monthly instalments, interest-free, if they join by 21 June 2021. Payments can be set up on the VAT Deferral New Payment Scheme portal.
HMRC data to 30 April 2021 shows 228,850 businesses that deferred their VAT last year have already paid their VAT in full. This, along with instalments already made under the new payment scheme and other payment plans, totals £15.1 billion. Since the online service opened on 23 February 2021 another £11.5 billion has already been committed to future instalment payments by 134,627 businesses.
Eligible businesses that are unable to access HMRC's online service can ring the HMRC Coronavirus Helpline on 0800 024 1222 to join the scheme (until 30 June 2021). Businesses should also contact HMRC by 30 June 2021 if they need to agree extra help to pay.
Businesses may be charged a 5% penalty and/or interest if they don't:
- join the scheme by 21 June;
- pay in full by 30 June;
- contact HMRC to make arrangements to pay by 30 June 2021.
Also this week, businesses are being are warned to prepare for COVID support audits by HMRC looking into the legitimacy of support grants, loans and furlough claimed during the coronavirus pandemic.
Last year, chancellor Rishi Sunak gave HMRC new powers to investigate businesses believed to have made false claims for furlough or grant payments. In the case of furlough, HMRC is able to reclaim 100% of any funds incorrectly or fraudulently claimed.
Chartered accountants robinson+co says businesses need to make sure they are not caught out by retrospective HMRC audits. "Undoubtedly some businesses will have been claiming for support that they weren't entitled to," said Peter Ellwood, managing partner at robinson+co. "In some cases, this will be intentional, but in others, it will purely be through honest mistakes made at a time when they were under extreme pressure."
Written by Rachel Miller.