Deferment Of VAT Liabilities Is Now Extended
The businesses which are struggling with their cash flows will happy to know that the deferment of VAT liabilities is now extended. During pandemic the coronavirus VAT payment holiday gave businesses the option to defer their VAT liabilities arising between 20 March 2020 and 30 June 2020. This option for businesses to deferment of VAT payments ended on 30 June 2020.
In delivering his Winter Economy Plan to Parliament, the Chancellor confirmed that businesses will now have the option to pay back any deferred VAT in smaller payments over a longer period. Instead of having to repay the full amount by 31 March 2021, businesses will now be able to make smaller interest-free payments during the 2021-22 financial year and thus clear the VAT due by 31 March 2022. https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19
Businesses will need to opt-in to the new scheme and more information on the process is expected to be published over the coming months. Businesses that can pay their deferred VAT can still to do so by 31 March 2021. No interest or penalties will accrue on deferred payments that are paid by the new due date.
If you have cancelled your Direct Debit to HMRC to take advantage of the deferral, you will need to set up a new Direct Debit arrangement in time for the first payment after 30 June.
Payments due after 30 June must be paid in full as normal and you must continue to file your VAT return on time.
The choice to defer VAT payments was optional and businesses could still choose to pay any VAT due as normal. The deferral did not cover payments for VAT MOSS or import VAT. HMRC has continued to process VAT reclaims and refunds as normal during this time.
