Anna’s Accountancy Alerts – Week 43 (25th – 31st January 2021)

Anna's Accountancy Alerts

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VAT Deferral

HMRC has issued some guidance to taxpayers that deferred their VAT payments between 20 March and 30 June 2020 and still have payments to make.

HMRC is advising taxpayers who deferred their VAT payments to:

  • pay the deferred VAT in full on or before 31 March 2021
  • or opt-in to the VAT deferral new payment scheme when it launches in 2021
  • or to contact HMRC if they need more help to pay.

Taxpayers can pay their deferred VAT in full by 31 March 2021. There is no need to contact HMRC.

However, if taxpayers want to use the new payment scheme they will need to opt-in. The new online opt-in process will be available in early 2021. Taxpayers will need to opt-in themselves as this cannot be carried out by tax agents.

Where taxpayers opt-in to the VAT deferral new payment scheme instead of paying the full amount by the end of March 2021, they can make up to 11 smaller monthly instalments which are interest-free.

All instalments of the outstanding amount must be paid by the end of March 2022.

In order for taxpayers to use the scheme they must:

  • still have deferred VAT to pay
  • be up to date with their VAT returns
  • opt-in before the end of March 2021
  • pay the first instalment before the end of March 2021
  • be able to pay the deferred VAT by Direct Debit.

Taxpayers must prepare to opt-in by:

  • creating their own Government Gateway account if they do not already have one
  • submitting any outstanding VAT returns from the last four years. You will not be able to join the scheme if you have not done so
  • correcting errors on their VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in their deferred VAT balance
  • ensuring they know how much they owe, including the amount they originally deferred and how much they may have already paid.

Pay VAT deferred due to coronavirus (COVID-19) – GOV.UK (www.gov.uk)

Tips For Avoiding A Tax Refund Being Delayed

When HMRC receives your tax return, it usually processes it automatically within a few working days. However, sometimes there is a need for human intervention – known as “clerical review”. This delays the processing of the return. If you are owed money by HMRC, this will also be delayed.

If you are claiming the marriage allowance in order to utilise some of your spouse or civil partner’s personal allowance, remember that your partner needs to have made the regular claim first.

The quickest way to do this is

Apply for Marriage Allowance – GOV.UK (www.gov.uk)

They should get confirmation within 24 hours and you can then submit your return.

You could also experience a delay if your self-assessment record was closed. You should easily be able to reopen the record by calling the self-assessment helpline on 0300 200 3310.

If you are self-employed, you will need to include your Class 2 and Class 4 NI contributions on your tax return. However, this can only be processed if you are on the NI self-employed database. If you have not done so, you should register for self-employed NI by submitting the form online.

Bounce Back Loans – Get One Even If You Don’t Need It?

The government’s lending programme to firms impacted by coronavirus has been extended and enhanced. This sounds like good news, but what might be the long-term cost implications?

You can borrow from £2,000 and up to 25% of your turnover (the maximum amount available is £50,000).

The government will cover any interest payable in the first twelve months through a Business Interruption Payment to the lender (who benefits from a 100% government-backed guarantee).

No repayments are due during the first twelve months.

After that, the interest rate is set at 2.5%.

Initially, the loan period was six years, but this has been extended to ten.

This can cut monthly payments almost in half.

The government extended the application deadline for the loans to the end of January 2021. So, if you haven’t already done so, should you try and apply?

The terms on the loans are fairly loose

The money can be used to kick-start your business or to help train staff with new skills.

Another way a business could take advantage of these loans is to use them to pay off other finance, like loans, hire purchase agreements etc.

Stay Up-To-Date With Coronavirus & Brexit News

Coronavirus has affected us all. Whether you’re a sole trader, employer or employee. Stay up to date with the latest news – including government support, tax implications, and more.