Nathan Bowden, from Lovewell Blake, says businesses need to be quick to benefit from government help
Businesses facing the double whammy of the continuing lockdown and a looming payment deadline for VAT they deferred during the first lockdown in 2020 have
been thrown a welcome lifeline by HMRC, but only if they act before the end of March.
During the initial lockdown in spring 2020, firms were offered the ability to defer VAT payments due between 20th March 2020 and 30th June 2020 until 31st March 2021, with the expectation that the Covid-19 pandemic would be under control and lockdowns would be a thing of the past.
But with the third lockdown potentially lasting up to and beyond March this year, HMRC has come up with an initiative which will enable firms to pay the deferred VAT over a period of up to 11 months, interest free.
When the initial offer of deferred payment was made in March last year, I think many people expected us to be putting the pandemic behind us March 2021.
As we know, that hasn’t happened, and many of the businesses which took advantage of the deferred payment scheme are still facing unprecedented challenges due to Covid-19.
So the decision by HMRC not to insist on full payment of the deferred VAT on 31st March is very welcome, and could be a lifeline for firms which are still facing cashflow issues due to the ongoing crisis.
In order to take advantage of this latest HMRC offer, businesses must be up to date with their VAT returns, and still have deferred VAT to pay. They will need to opt into the scheme, and make their first payment, before 31st March, and be able to make ongoing payments by direct debit.
Firms will then be able to pay the deferred VAT over between two and 11 months, interest free.
Applications for the scheme open on 23rd February.
To apply, businesses will need a Government gateway account set up with access to their VAT.Enrolment can be done by the business itself, or by its tax agent or advisor.
Further details can be found on the HMRC website at www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19.