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Self-assessment and VAT payments

As part of the UK Government’s response to coronavirus some self-assessment and VAT payments during 2020 were deferred until 2021.  If you have taken advantage of deferrals, now’s the time to consider how and when you will pay these liabilities.

Self-Assessment

Self-assessment taxpayers had the option to defer their 2019/20 2nd payment on account, due in July 2020, to January 2021. If you took the option to defer your 2nd payment on account, liabilities due by 31 January 2021 will be:

  • 2019/20 2nd payment on account
  • 2019/20 final payment on account
  • 2020/21 1st payment on account

If you find you are unable to pay the above liabilities by 31 January 2021 you have the option to pay these in instalments using a Time to Pay Instalment Arrangement.  If you owe up to £30,000 you can do this online via your Government Gateway account without having to contact HMRC directly once your tax return has been filed.

CFW as agents are not able to arrange Time To Pay arrangements for our clients.  We recommend you set up a Time to Pay arrangement as soon as you are aware you are unable to pay your liabilities.  Late payment penalties are charged when tax remains unpaid 30 days, 6 months, and 12 months after its due date for payment.  You can avoid them if you enter into a Time to Pay arrangement before the liabilities become due and you pay all the tax owing under that arrangement on time.  Interest is payable on Time to Pay instalments

VAT

If you deferred VAT between 20 March and 30 June 2020 and still have payments to make, you have a number of options in 2021.  You can:

  • pay the deferred VAT in full on or before 31 March 2021.
  • opt in to the VAT deferral new payment scheme when it launches in 2021.
  • contact HMRC if you need more help to pay.

Pay in full on or before 31 March 2021. The deferred VAT can be paid any time before 31 March 2021.  You can find details of how to pay VAT here.

New payment scheme

Rather than paying the deferred VAT in full on or before 31 March 2021, you can make between 2 to 11 smaller monthly instalments, interest free.  All instalments must be paid by the end of March 2022. To use this scheme, you must be up to date with all your VAT returns and be able to pay the deferred VAT by Direct Debit.

The opt in process will be online and will open early 2021.  CFW as agents are not able to opt in to this scheme on your behalf therefore you will need to have your own Government Gateway account and access to your VAT records via this account.

Links

Our previous updates can be found on Facebook and LinkedIn or on our website blog.

A UK Government general COVID-19 support website can be found here.  It contains guidance on all matters pertaining to the Coronavirus.

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