Penalty rates for deferred VAT scheme set at 5%

HMRC has confirmed that companies will be liable for a 5% penalty or interest if they do not pay in full or make an arrangement to pay deferred VAT by 30 June 2021

At the start of the covid pandemic, the government announced a three-month deferral of VAT payments for the first tax quarter of 2020, and payments for outstanding VAT are now due.

Companies that deferred VAT payments due between 20 March 2020 and 30 June 2020 can either pay the deferred VAT in full now or join the VAT deferral new payment scheme. The online VAT deferral notification service opened on 23 February 2021 and is available until 21 June 2021.

The VAT deferral payment scheme allows taxpayers to schedule payments on a monthly basis. The scheme lets you pay your deferred VAT in equal instalments, interest free; and choose the number of instalments by direct debit, from 2 to 11 (depending on when you join).

If you join byNumber of instalments
21 April 202110
19 May 20219
21 June 20218

You cannot include extra payments after you’ve joined the scheme. Any error correction relating to the deferral period that is notified to HMRC after 31 March 2021, cannot be deferred and interest will apply.

HMRC guidance, Pay VAT deferred due to coronavirus (Covid-19)

 

Sara White |Editor, Accountancy Daily, published by Croner-i

Sara White is editor of Accountancy Daily, published by Croner-i, and in...

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