*Updated 18 Feb 2021*
HMRC have recently provided further information on how businesses can join the VAT deferral new payment scheme.
Businesses which still have outstanding deferred VAT payments can either pay the deferred VAT in full, on or before 31 March 2021, join the VAT deferral new payment scheme or contact HMRC if extra help to pay is required. Check out our blog, ‘Did you defer your VAT due to COVID’.
HM Revenue & Customs (‘HMRC’) is deferring Income Tax and VAT tax liabilities to further assist with cashflow management following the Coronavirus (COVID-19) outbreak.
In addition to the new helpline offering financial support, Rishi Sunak has announced that HMRC are deferring the following payments:
· Self-Assessment Payments on Account of Income Tax originally falling due on 31 July 2020 have now been deferred to 31 January 2021.
· VAT payments falling due between now and the end of June 2020 have been deferred. Taxpayers will be given until the end of the 2020/2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid as normal until the end of the financial year.
If you normally pay your VAT liabilities by direct debit, you should cancel your direct debit with your bank if you are unable to pay and wish to take advantage of the deferral. This should be done as early as possible in order that HMRC do not attempt to automatically collect the payment due on receipt of the VAT return.
The deferment of these liabilities provides immediate relief to those affected by COVID-19, however the effects of these deferments should also be considered. 31 January 2021 will now potentially see Self-Assessment taxpayers due to pay their second 2019/20 Payment on Account, their 2019/20 balancing payment and their first 2020/21 Payment on Account all at once!
Careful consideration will have to be given to cashflow management over the coming months to ensure that the deferment of these liabilities has the positive effects intended rather than simply postponing cashflow problems.
For further information regarding managing your tax liabilities, don’t hesitate to get in touch.