Vat Payment Agreement
If you did not make a self-assessment payment on invoice in July 2020, your payment period has been delayed until January 31, 2021 (postponed). You don`t have to contact HMRC and you don`t have to pay a fine. Normally, these TTP agreements are penalized at 3.5%, but according to Chancellor Rishi Sunak`s latest budget, this is cancelled for the duration of the virus. If a payment due between March 20, 2020 and June 30, 2020 was deferred but the compensation was not paid, the amount payable was the amount of compensation, net of any deferred payments. Deferring payments does not result in a refund. This is particularly the case for companies in VAT-exempt sectors, such as financial services, where VAT refunds are limited or non-existent. Similarly, a beneficiary will want to ensure that they receive the additional 20% if they have to account for VAT to HMRC for payment. HMRC`s flexibility will likely end abruptly if you don`t stick to an already negotiated payment plan. In addition, the payment plan fails when other taxes due are not paid. If you do not make your agreed payments, they will likely cancel the time-to-pay agreement and may also impose a penalty. How you do it will depend on whether you receive a payment request.
However, the formulation of a transaction agreement, by adding an overall figure paid in one direction to a tally of all receivables, can avoid this issue (since there is no compensation at that time). If you are struggling to pay your VAT bill, HMRC is open to late payment plans, provided certain criteria are met. They are less flexible in vat than other areas (for example. (B) corporate tax arrears) simply because VAT is primarily government money and businesses are tax collectors only on their behalf. The practical effect of the deferral is that payments for quarters due February 29, 2020 (if not to be made by March 20, 2020), March 31, 2020 and April 30, 2020 must be paid by March 31, 2021 (see later if the company opts for the new payment system).