As part of the Chancellor’s Winter Economy Plan he announced that businesses who had previously deferred VAT due from 20th March 2020 to 30th June 2020 will now have the option to pay this in smaller payments over a longer period. It was initially stated that this deferred VAT would need to be paid in full by the end of March 2021. It is now the case that you are able to make smaller payments up to the end of March 2022. The further good news is that there will be no interest charged on the overdue amount.
It is stated that ‘those that can pay their deferred VAT can still do so by 31 March 2021’, an indication perhaps that the government is encouraging tax payers not to take advantage of the scheme if they are indeed in a position to pay their outstanding liabilities on time.
I believe the above measure is very welcome as there has been significant concern that many of the hardest hit business could well have struggled to settle their deferred VAT bill next March leading to further financial difficulty and even business failure.
More information on the scheme will be coming out from government in the coming months.