It has been confirmed today that the payment of the suspended VAT quarter (the VAT quarter due in March to June 2020) which was previous due for repayment by end of March 2021 can now be repaid by way of 11 equal instalments over the tax year 2021/2022 in order to avoid businesses suffering substantial cash outflows over a short period.
All businesses that chose to defer their VAT payment earlier this year are eligible for this ‘New Payment Scheme’ but it is not automatic – you must opt in. It is anticipated that you will be able to register your interest in this scheme in early 2021.
Those in Self Assessment, with a liability of up to £30,000 can choose to repay their January 2021 liability over a 12 month period, meaning the liability need not be paid in full until 31 January 2022. This will include both any deferred July 2020 payment on account and the balancing payment and first payment on account that would otherwise have been due by the end of January 2021.
On the basis of information available to date it appears that the July 2021 payment to account will be payable as normal.
There is, as yet, no published guidance on the applicability of interest to this instalment payment option, though we are likely to see clarification over the next few days or weeks.
There will be a ‘self-service’ Time to Pay arrangement for this type of instalment option. If you would struggle to make this payment by way of 12 monthly instalments you can arrange a bespoke repayment plan with HMRC via their Time to Pay line.