5% Penalty Rates Set for Deferred VAT
HMRC has confirmed companies will be liable for a 5% penalty or interest, if they fail to pay in full, or make arrangements to pay deferred VAT by 30 June.
When the Covid pandemic hit, UK government announced a three-month deferral of VAT payments for first tax quarter 2020, and payments for outstanding VAT are now due.
Companies that deferred VAT payments due, 20 March 2020 to 30 June 2020, can pay deferred VAT in full now, or join the VAT deferral new payment scheme. The online VAT deferral notification service opened 23 February 2021 and is available until 21 June 2021.
The VAT deferral allows taxpayers to schedule payments monthly in equal instalments, interest free; by direct debit, from 2 to 11 installments as follows:
- joined by 21 April 2021: 10
- joined by 19 May 2021: 9
- joined by 21 June 2021: 8
You cannot include extra payments after you’ve joined. Any error correction relating to the deferral period that is notified to HMRC after 31 March 2021, cannot be deferred and interest will apply. HMRC guidance on paying VAT deferred due to Covid-19.
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For any advice or support with tax related matters, pandemic related or otherwise, please contact our South Wales team of tax specialists on info@lhp.co.uk or 01267 237 534.
