Self-Assessment, VAT and Corporation Tax Deferrals

Self-Assessment, VAT and Corporation Tax Deferrals 150 150 Cypher

Self-Assessment, VAT and Corporation Tax Deferrals

You may be interested to know that earlier this month, half of the people due to file a tax return hadn’t done so, while VAT and Corporation Tax can now be deferred until March 2022.

January is a very busy month for accountants, but it could get busier in the next few weeks. As the deadline looms for self-assessment tax returns at the end of January, HMRC reported earlier this month that nearly half of those due to file a return hadn’t done so.

As of January 4th, HMRC had received 6.6m of the total 12.1m expected self-assessment tax returns due to be filed before the January 31st deadline.

Due to the various lockdowns we have experienced since March, many people are still struggling to gather the data that they need – often from third parties to file these returns. However, as things presently stand, if you are not able to finalise your tax returns by the end of this month, you would be subject to automatic late filing penalties – even if there is no tax due.


In addition to the self-assessment payments, Government figures suggest that some £30bn of VAT payments were also deferred this year.

Up to half a million businesses are thought to have taken advantage of the COVID-19 VAT payment deferral scheme, which allowed them to defer VAT payments falling due between 20 March 2020 and 30 June 2020 until 31 March 2021. HMRC has recently issued guidance on the process of extending the deferral by a year to the end of March 2022.

Businesses choosing this route will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20 March and 30 June 2020 can be split into smaller, interest free payments over the course of 11 months until March 31st 2022. Of course, those that can pay their deferred VAT can still do so by 31 March 2021.

The scheme will allow organisations to pay their deferred VAT in instalments without incurring interest charges and select the number of instalments from 2 to 11 equal monthly payments. To use it organisations must still have deferred VAT to pay, be up to date with VAT return declarations and be able to pay the deferred VAT by Direct Debit.

Time to Pay Arrangements

As well as deferring VAT payments, HMRC has allowed business owners to defer their Corporation Tax bills. For many, largely due to COVID, this was a chunk of money they don’t have. Paying out a large sum, in one go, could jeopardise cash flow so many have sought to put this off. If you are still unable to pay the VAT or Corporation Tax due and need more time, you can apply to HMRC for a Time to Pay Arrangement.

HMRC Time to Pay Arrangements (TTP) are structured payment plans for debt repayment over an agreed time period. Be aware that HMRC does not give these out lightly, but equally they do recognise that in certain circumstances businesses need help. In light of the impact that the Coronavirus (COVID-19) pandemic has had on so many businesses, across all industries, they may well be more permissive than ever as the Government recognises that it must does everything it can to help businesses through these challenging times.

HMRC has even set up a helpline for business owners, ready to offer advice and support. Usually, these TTP agreements come with a 3.5% penalty charge but, according to Chancellor Rishi Sunak’s autumn budget statement, this will be waived for the duration of the virus.

If you concerned about not being able to pay HMRC, speak to your accountant or make this number a first port of call.

HMRC Coronavirus Helpline: 0800 015 9559, Monday to Friday, 8am to 8pm, Saturday, 8am to 4pm

As the UK experiences another nationwide lockdown, it’s important that as a business- and a sector- we learn our lessons from 2020 and adapt accordingly. Since March we have tried to ensure that business owners know their options, understand the support that is on offer and that we are available for them. The whole point of offering a ‘you can get hold of us anytime service’ is that clients can actually get hold of us.

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If your business could use the Cypher touch, please contact us and we will be happy to discuss your options.