Have you deferred tax payments?

One of the first actions the government took at the beginning of lockdown1.0 was to offer businesses the option to defer VAT payments to the end of March 2021. That was a year away and nobody expected the situation to continue for anything like that long. But now we're just over a month from the deadline.

Contrary to some people's belief - there was only ONE VAT payment that was eligible to defer and that was for payments due between 20^th March and 30^th June 2020.

If you can pay the outstanding amount in full, now's the time to do that. Don't leave it until the last possible moment. 

If you're business has been hit hard by the lockdowns, you may be worrying about how you're going to make this payment, but whatever you do, don't bury your head in the sand - it will only make the situation worse.

HMRC tend to be reasonable - especially with the current economic climate. In fact, they have already announced a payment scheme that will allow you to pay your outstanding VAT in instalments over the year following.

How to register for the payment scheme

The first little challenge is that your accountant will not be able to apply for this on your behalf - it has to be done directly.

• Step one is to ensure you already have a Government Gateway account - and, if not, create one.
• Next ensure there are no outstanding VAT returns over the past 4 years. Your VAT paperwork needs to be right up-to-date for you to be eligible.
• Make sure there are no errors on your VAT returns - and get them corrected before you make an application.
• Be clear on the exact amount that is outstanding.
• If you can make a part-payment to reduce your balance, then do so as soon as possible.
• Decide how many months you want to spread your payments over - you can choose from 2 to 11 months.

At the time of writing the payment scheme is not yet open, HMRC announced that it will be launched 'early 2021', check this link for more information.