As part of the Government’s response to COVID-19 the Chancellor announced during the first lock-down in 2020, that the Self-Assessment Payment on Account due on or before 31st July 2020, could be deferred to 31st January 2021; and the VAT payment due between 20th March to 20th June could be deferred to 31st March 2021.
In October the Chancellor announced that if individuals/businesses were unable to make these deferred tax payments by the new deadlines, they would be able to pay in instalments.
We would ask clients who deferred either or both of these payments to take action as set out below. If no action is taken, you will incur penalties from HMRC.
Deferred July 2020 Self-Assessment Payment on Account
We would like to emphasise that should the July 2020 payment be made before 31st January 2021, there will be no interest or penalty.
If you are unable to make that payment before 31st January, you will have to set up a Time to Pay arrangement with HMRC. If you owe up to £30,000 you can do this online without having to contact HMRC directly. You can only set up the arrangement 48 hours after your 2019/2020 Self-Assessment return has been filed. Please note that interest is payable on Time to Pay instalments, which is currently 2.6%. If you already have a Time to Pay arrangement in place for other overdue tax, you will need to contact HMRC to amend that arrangement to include the deferred July 2020 Payment on Account.
If you do not set up the Time to Pay arrangement, normal penalties will be incurred for all unpaid tax at 30 days, six months and 12 months after its due date for payment.
To set up a Time to Pay arrangement, please log in to the Government Gateway.
Deferred VAT Payment due March 2020 to June 2020
Again, we would like to emphasise that should this deferred VAT payment be made before 31st March 2021, there will be no interest or penalty.
If you are unable to make that payment before 31st March, you must opt in to a new Payment Scheme. Under the Scheme you can make the deferred payment in equal monthly payments – you can choose to make the payments between two and 11 instalments. The Scheme is interest free; and all instalments must be paid before the 31st March 2022.
To use the Scheme you must:
- still have deferred VAT to pay
- be up to date with your VAT returns
- opt in before the end of March 2021
- pay the first instalment before the end of March 2021
- be able to pay the deferred VAT by Direct Debit
HMRC has stipulated that you must opt in yourself, we are unable to do this for you.
The Payment Scheme is not yet live, so you are unable to opt in yet. We will let you know when the Scheme has gone live.