Published: February 26th, 2021 in Accounting, Budget/Finance News
From 23 February 2021, businesses across the United Kingdom will have the opportunity to take advantage of the Government’s newly announced deferred 2020 VAT payment plan to repay any VAT that was deferred in 2020.
From understanding what the payment plan is, to gauging how payments are to be made, at The Financial Management Centre, we have provided you with all of the information you need to determine whether the payment plan can assist you in repaying any deferred VAT below.
If you have any questions or would like to speak with one of our experts directly, please do not hesitate to contact us.
What Is The Deferred 2020 VAT Payment Plan?
The deferred 2020 VAT payment plan is a newly implemented payment scheme that the Government has devised to support businesses that deferred VAT payments in 2020 due to the pandemic.
Offering businesses the time they need to repay any VAT payments deferred in 2020, the plan will alleviate additional financial pressure and ensure that businesses can manage their cash flow over the next year.
Who Can Take Advantage Of The Deferred 2020 VAT Payment Plan?
As touched on above, businesses across the United Kingdom that deferred VAT payments in 2020 will be able to take advantage of the payment plan.
However, those that wish to do so much register for the payment plan via their Government Gateway account.
In addition, in order to take advantage of the payment plan, businesses must be up-to-date with any current VAT returns and must ensure that they know how much VAT they will need to pay.
What Rules and Regulations Apply To The Deferred 2020 VAT Payment Plan?
Although the Government has ensured that all businesses who deferred VAT payments in 2020 can take advantage of the deferred 2020 payment plan, there are various rules and regulations that apply.
For example, in order to join the payment plan, businesses must submit any outstanding VAT returns. Any errors on VAT returns must also be corrected.
How Are Payments Made?
Upon registering for the deferred 2020 VAT payment plan, payments are made directly to HMRC via the businesses Government Gateway account. Most businesses will already have a Government Gateway account.
However, if you are yet to register for a Government Gateway account, you must do so in order to take advantage of the payment plan and make any deferred VAT payments. You can register on the HMRC website here.
When considering how HMRC payments are made via a Government Gateway account, the deferred 2020 VAT payment plan offers businesses two payment options.
The option you take advantage of will depend entirely on your financial circumstances and personal preferences. Below, we have provided insight into the two options.
Take Advantage Of The Deferred 2020 VAT Payment Plan
While some businesses will look to pay the deferred VAT payment in full, the deferred 2020 VAT payment plan is expected to be utilised by a more significant number of businesses.
This is because the payment plan will enable businesses to pay monthly instalments to ensure that their deferred VAT is paid.
Should you wish to take advantage of the payment plan, you will need to join the plan before 21 June 2021. It should be noted that the later you join, the less time you will have to repay your deferred VAT payment.
For example, if you join the payment plan by 19 March 2021, you will essentially have eleven months to repay your VAT. However, if you only join the plan on 21 June 2021, you will only have eight months to repay the total cost of your deferred VAT payment.
Although you will repay your deferred VAT in full irrespective of when you join the deferred 2020 VAT payment plan, businesses may find it somewhat beneficial to spread the total cost over eleven months due to reduced monthly costs.
Should you opt to take advantage of the VAT payment plan, you will be required to make monthly payments via Direct Debit.
Pay The Deferred VAT Payment In Full
In addition to taking advantage of the deferred 2020 VAT payment plan, should you wish to, you can pay your deferred VAT payment in full.
However, it should be noted that if you decide to pay your deferred VAT payment in full, you will need to ensure that the payment is made by 31 March 2021.
If you decide to pay your VAT payment in full, you can do so via debit or credit card.
How Much Will I Be Expected To Pay?
The amount of VAT that you will be expected to pay via the deferred 2020 VAT payment plan will entirely depend on the total amount of VAT that you deferred between 20 March 2020 and 30 June 2020.
Regardless of when you join the deferred 2020 VAT payment plan, you will be expected to pay the complete sum of deferred VAT.
It should be noted that businesses that do not pay the deferred VAT in full by 31 March 2021 or sign up to the deferred 2020 VAT payment plan by 21 June 2021 will be charged interest on the overdue VAT. HMRC may also issue a penalty.
Contact The Financial Management Centre Today
Here at The Financial Management Centre, we can help you understand how much VAT you will be expected to pay should you take advantage of the deferred 2020 VAT payment plan.
We can also provide you with accounting services to ensure that your VAT returns are submitted and/or corrected before joining the payment plan.
Furthermore, our team can help you register for the plan and set up a direct debit on your behalf to ensure that your deferred VAT is paid on time to HMRC.
To discuss the deferred VAT payment plan with one of our accountants or to take advantage of our assistance, please call us today on 0333 202 7198.
Alternatively, you can email info@tfmcentre.co.uk, and one of our accountants will contact you as soon as possible.
Source
https://www.gov.uk/log-in-register-hmrc-online-services
