- 2nd August 2021
- Posted by: Suzy Hill
- Category: Business News, VAT
UK businesses owe HMRC £2.7bn after VAT holiday
HMRC is still owed £2.7bn in deferred VAT payments from over 150,000 UK businesses who have not yet made arrangements to pay it back
Information released by HMRC through a Freedom of Information request (FOI) found that as of 30 June 2021, 9% of the total VAT that was deferred by businesses in the pandemic was not accounted for.
The figures showed that approximately 590,000 businesses used the scheme and deferred VAT payments to the value of £33.5bn between March and June 2020.
Of the overall figure, £17.8bn has already been paid back to HMRC and £13bn is due through monthly instalments arranged with the tax authority.
Businesses who deferred their VAT were given until 31 March 2021 to pay back the VAT in full or until 30 June 2021 to make an arrangement to pay either through the VAT Deferral New Payment Scheme which allowed businesses to plan an alternative way of paying the funds back. The scheme allowed businesses to spread their payments across up to eight equal monthly instalments, interest-free. The online portal for the scheme closed on 21 June 2021.
The tax authority has urged businesses who still need to arrange repayment to come forward sooner rather than later as businesses who do not arrange VAT payment plans will face penalties of 5% of the money owed, plus interest.
The figures released are expected to heighten the growing concerns that the UK government will never recover the majority of the coronavirus support and tax breaks distributed during the first lockdown, with some claimants going out of business and others being pursued by HMRC debt collectors.
An HMRC spokesperson said: ‘HMRC will support any taxpayer in financial distress as a result of covid-19 and any business that may struggle to pay its deferred VAT should contact us.
‘Businesses had up to 30 June to make arrangements to pay their deferred VAT, so those who failed to take action should contact HMRC to pay what they owe. They may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and tailored to individual circumstances and liabilities.’
In a statement to Accountancy Daily, HMRC said that the key thing is that if people get in touch with HRMC then the government body will support them, as the priority is to help anyone with debt as much as possible