COVID-19

14.01.2021

2 things you MUST be aware of if you are taking advantage of the furlough scheme or deferral of VAT

Coronavirus Job Retention Scheme (Furlough)

One of the major changes to the furlough scheme when it was extended originally to end of March 2021 and then to end of April 2021, is the publication of information about employers who are claiming under the furlough scheme.  As such, employers who are using the furlough scheme need to be prepared for the fact that their use of the furlough scheme will be in the public domain and they should prepare for the potential greater scrutiny that this could bring.

In an update to the furlough guidance (Employer claim information that HMRC will make public), the Government has confirmed that they will be publishing information about employers who claim under the furlough scheme for the period starting on or after 1 December 2020.  Initially, HMRC will publish a list of employer names on GOV.UK on 26 January 2021.  In February 2021, HMRC will then start to publish the following information on a monthly basis:  the employer name; an indication of the value of the claim by the employer within a banded range; the company number for companies and LLPs.

It is also worth noting that in February, HMRC will also be improving the information available to furloughed employees. HMRC will be including details of claims made for them, for claim periods starting on or after 1 December 2020, in their Personal Tax Account.

There is a restriction on the publication of the furlough claim information if employers can show that publishing the information would result in a serious risk of violence or intimidation.  For employers who believe they fall in this category, they will need to make a request to HMRC not to publish the information but that request will need to be supported by evidence of the risk.

Given the publication of furlough claim information to both the public and individual employees, an employer’s use of the scheme is likely to come under review.  As such, employers need to review their furlough scheme arrangements to ensure that they have fully complied with the scheme and have only made claims for employees properly furloughed under the scheme.

VAT deferral

If you deferred your VAT payment due between 20 March and 30 June 2020 and still have payments to make, you can pay the deferred VAT in full on or before 31 March 2021 or you can opt in to the VAT deferral new payment scheme when it launches in 2021.

The new payment scheme is not open to opt in yet.  The online opt in process will be available in early 2021. Importantly, you must opt in yourself, your agent cannot do this for you.

Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022.

To use this scheme you must:

  • still have deferred VAT to pay
  • be up to date with your 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

Get ready to opt in to the new payment scheme:

Before opting in you must:

  • create your own Government Gateway account if you don’t already have one
  • submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
  • correct errors on your VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in your deferred VAT balance
  • make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

You should also:

  • pay what you can as soon as possible to allow us to show the correct deferred VAT balance
  • consider the number of equal instalments you’ll need, from 2 to 11 months

The new payment scheme will be helpful to those that may struggle to pay the deferred VAT in full by 31 March 2021.

Furlough, Furloughing, HMRC, HMRC investigations, vat, VAT Deferral