February 11th saw HMRC announce their next COVID-19 support scheme for businesses, the VAT Deferral Scheme. Designed to help with cash flow, the scheme allows businesses to defer their VAT liabilities generated between the 20th of March and 30th of June 2020.
In this blog we explore the scheme further, explain how to register, and give you other essential information.
How does the new scheme work?
The full deferred VAT payment was due to HMRC by March 31st 2021, but HMRC have now introduced the deferral scheme to allow business owners to pay any outstanding amounts due in a more manageable way.
The scheme will run from February 23rd until June 21st 2021, and once both you and your business are registered and have been accepted by HMRC, the scheme will allow you to pay any deferred VAT interest free in equal instalments. You’re also able to choose how many instalment payments you make, between two and eleven, depending on when you register your business.
How do you register your business?
Visit the gov.uk website to get registered. We advise setting up your government gateway account as soon as possible, so that you’re able to make the most from the maximum (eleven) number of instalments you’re able to make.
You’ll also need to add the VAT account which will require a code, which is sent to you in the post. Therefore the sooner you’re able to get this all completed, the better.
How else can you register your business?
If you can’t register online, you can do so by calling HMRC’s COVID-19 helpline on 0800 024 1222 once the scheme is officially open.
Can your accountant do it on your behalf?
Unfortunately not, only you can do this.
What other prerequisites are there?
To qualify for the scheme you must:
If you’re currently using any other HMRC payment arrangements, such as the Time to Pay scheme or have any other outstanding tax or other debts, you’re still eligible to use the VAT Deferral Scheme.
What happens if your business is on the VAT Payment on Account Scheme or the VAT Annual Accounting Scheme?
You’ll still be able to use the new scheme, but rather than registering yourself, you will be invited to join later on in March 2021.
What’ll happen if you don’t pay by March 31st, join the new scheme or arrange any additional support with HMRC?
You may face a payment penalty or interest.
How can Taxevo help?
Our team of expert accountants are here to help guide you through any announcements from HMRC, and advise you on all things relating to your contracting and freelancing career. Get in touch to find out more information on how we can help you.