HMRC are advising employers to act now to avoid a penalty if you deferred VAT payments as a result of difficulties stemming from the Covid-19 pandemic. You may be charged either a 5% penalty or interest or both if you have deferred VAT outstanding.
Businesses that deferred VAT payments due between 20 March 2020 and 30 June 2020 were able to either:
- pay in full by 31 March 2021
- join the online VAT deferral new payment scheme by 21 June 2021 to spread payments of deferred VAT over smaller, interest free instalments
- contact HMRC to make an arrangement to pay by 30 June 2021
HMRC helpfully state that they will support any taxpayer in financial distress because of COVID-19 and are urging all employers to contact them as soon as possible if they are struggling to pay your deferred VAT to make an arrangement to pay.
More information is available on deferred VAT and the penalty charge due to COVID-19.