UK Deferred VAT : Do You Need To Spread Your Payments?
You need to start paying it soon ...
Posted by Alison Mead on 21/06/2021 @ 8:00AM
Many of my clients deferred VAT payments last year when the first lockdowns happened. It was for payments due between 20th March and 30th June 2020 and it allowed you to postpone payment without any interest or adverse marks on your HMRC record ...
If you meet the criteria then you have until 21st June to set up your deferred VAT payments!
However, the time is fast approaching when you need to make those payments, and for many businesses who are in industries still locked down, this may mean you can't afford to pay this deferred VAT.
"If the thought of finding all that money in one go is causing issues then keep reading!"
HMRC has launched a new deferral option that allows you to spread the payments over several months giving you more time to pay. It is far better to proactively contact HMRC if this is still too much for you rather than just stick your head in the sand. This might be just the lifeline you need.
If you meet the criteria set out on the HMRC website then you have until 21st June to set up your deferred VAT payments. If you need even more time to pay, you should contact HMRC by 30th June 2021.
Once you have signed up for the scheme, how do you record the payments on your Sage50c or Xero software? Well, in Sage50c you can set up recurring payments in the Bank section so each payment will be posted to your VAT liability account with the tax code of T9 (Outside the scope) as per your agreement with the HMRC.
In Xero and Sage Business Cloud you can code the payments to the VAT account or VAT liability account as they appear on your bank feed using the create options in the software. Again ensure you use the No VAT or outside the scope options to ensure the payments do not appear on future VAT returns.
The very worst thing you can do is not to pay and not talk to HMRC. Communication is key if your business is still experiencing issues post-pandemic and there are plenty of business advice out there for those who need it. In extreme cases, you may want to talk to an insolvency practitioner.
They will advise you on how you can keep your business going in these uncertain times.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about allocating deferred VAT in your bookkeeping program, or would like to arrange one of my handholding sessions, call me on 01604 420057 and let's see how I can help you.
Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.
She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.
Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.
You know what they say: if you want something done well ask a busy person!
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