Get ready to pay your deferred VAT & Self-Assessment bills
During the early stages of the first lockdown, the Government gave the option to defer VAT and Self-Assessment bills until later in the year. This allowed you to put that VAT income to good use, propping up your cashflow during the lean times of the initial business shutdown.
While these deferrals may have been a lifeline at the time, the time has now come to pay that VAT bill, and it’s important that you’re ready to cover this liability and pay the required bill.
Preparing to pay your VAT bill
If you made use of the VAT deferral scheme, these are the options now open to you:
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.
Paying your bill will obviously mean finding the requisite funds to cover the bill, so this deferred payment (and the associated cost) is something you need to factor into your planning and budgeting for the first quarter of 2021 and beyond.
The VAT deferral new payment scheme has yet to be defined in detail, but appears to allow you to break your VAT bill payments down across smaller instalments across the year.
Preparing to pay your Self-Assessment bill
If you made use of the Self-Assessment deferral scheme, these are the options now open to you:
pay the deferred VAT in full on or before 31 March 2021
if you can’t pay your tax in full you can set up a time to pay arrangement with HMRC. Late payment charges apply when tax is paid late. However, these can be avoided when a time to pay arrangement is set up. Interest is still payable on time to pay arrangements.
Talk to us about how to overcome the business issue
Business revenues may have returned to some form of normality in the intervening months, but the increasingly strict local Tier 2, 3 and 4 restrictions may once again be affecting revenues and cashflow – so it’s important to choose the right option when it comes to paying your deferred VAT or Self-Assessment.
As your accountant, we can help you to review and forecast your revenue and cashflow positions for the first quarter of 2021, and will help you decide on the best tactic for settling your deferred bill – whether that’s paying the bill in March, or deferring it, if the rules permit.
Get in touch to talk through your tax liabilities.
