Covid-19 – Deferred VAT update

One of the Covid measures was the delayed payment of the Spring 20 VAT liability (technically, that was any payment due between 20 March and 30 June 2020).

 

On first announcement the deadline for repayment was 31 March 2021, but since then the option has been provided to spread the liability across (up to) 11 payments ending early 2022.

 

The original scheme did not require ‘opt in’ but the revision to spread the liability over a number of payments does.  This post summarises the key features and any practical guidance of the updated scheme, for which the application period is open until 30 June 2021.  Points to take into account:

 

  • Number of instalments range from 2 to 11 (depending on when you join i.e. if you do not join by 19 March 2021, max instalments will go down from 11 to 10 – and this rolls over month by month to 21 June 2021 which is the latest date to join and at which point the maximum number of instalments is 8.)
  • Interest free but requires a Direct Debit instruction setting up.
  • You must have your own Government Gateway (GG) account set up.
  • Follow this link to join the scheme https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19 the button is about half-way down the page.

Practical/other issues spotted so far:

 

  • HMRC website suggests returns are not up to date (when they are) – there is a “known issue with the NPS system” and the DD can be manually set up via webchat (https://www.tax.service.gov.uk/ask-hmrc/webchat/payment-problems)  or telephone helpline 0800 024 1222.
  • Receive message saying “Service is down” when setting up DD – this was resolved by clearing the internet browser cache.
  • Some people have heard rumours that you need to demonstrate (un-)affordability to qualify.  In our experience this is not the case.
  • It is possible to repay all in one go.  Should you wish to clear down the historic liability in full, make the payment as usual quoting your VAT reference and it will applied to your account.

This a recent update and as you can see from the notes, HMRC and their systems are still getting up to speed.