On 11 February 2021 we reminded you that VAT payments due in the period: 20 March – 30 June 2020, which were automatically deferred, now need to be paid.
The business could either pay the debt in full by 31 March 2021, or join an automated payment scheme by 21 June 2021. This scheme will require the business to pay the debt in monthly instalments by direct debit, with the final payment made in January 2022.
You can’t arrange a VAT payment plan on behalf of your clients as you won’t have authority to agree to make payments from their business bank accounts. However, the HMRC will allow businesses to arrange a payment plan for the deferred VAT even if they have already entered a time to pay arrangement for other taxes.
If the business does not register to join the payment scheme by 21 June the whole sum deferred from 2020 must be paid in full by 30 June 2021. HMRC may well also impose a 5% late payment penalty and interest if the debt is not paid in full by 30 June.
Written by the Tax Advice Network