Businesses can use the new VAT payment deferral scheme to spread their tax liabilities into smaller payments, it has been confirmed.
The news comes after the launch of the VAT Deferral New Payment Scheme, which is designed to help businesses who deferred VAT payments in response to the Covid-19 outbreak.
Introduced last year, the VAT deferral scheme enabled businesses to defer VAT payments between 20 March and 30 June 2020 to bolster cash flow.
However, businesses were told that accumulated liabilities would have to be paid in full on or before 31 March 2021.
But the new scheme will give businesses the choice to pay their liabilities in smaller, monthly increments.
According to HM Revenue & Customs (HMRC), businesses must opt-in to the VAT Deferral New Payment Scheme before 21 June 2021, or pay their bill in full before 31 March 2021, to avoid being charged interest and penalties.
Commenting on the scheme, Jesse Norman, Financial Secretary to the Treasury, said: “The government has provided a package of support worth over £280 billion during the pandemic to help protect millions of jobs and businesses.
“This now includes the VAT Deferral New Payment Scheme, which will help provide businesses with the breathing space they may need to manage their cashflows in the weeks and months ahead.”
The latest statistics suggest that over half a million businesses deferred VAT payments last year.
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