For many business owners, the special payment deferral is due to expire soon, or has already expired. What now? Do you want to extend the special deferral period or not? What are the implications for payments?
Special deferral of payment
In our article Special payment deferral: an update We set out the conditions that apply to obtaining a special deferral of payment in the event of payment difficulties resulting from the coronavirus crisis.
Once the deferral granted has expired, a decision must be made as to whether or not to extend the special deferral. This decision will then have implications for the payments.
No extension
If you decide not to apply for an extension, you must pay all new tax returns and assessments on time. You do not have to pay immediately the tax debts for which you have been granted special deferral over the past three months and which have not yet been paid! The Tax and Customs Administration will send you a letter after the summer containing a ‘proposal for a payment plan’. It is not yet known what form this payment proposal will take.
Tax debts for which the obligation to pay arises after the end of the deferral period are not covered by the scheme. These tax debts must simply be paid before the payment deadline. So always pay the most recent tax assessments first!
The amounts due on payroll tax and VAT returns must therefore be paid on time. You must not wait for a supplementary tax assessment. If you do, the penalty for your failure to pay will not be waived.
Example
You applied for a special deferral of payment on 23 April 2020. Your three-month deferral will therefore run until 23 July 2020. Unless you apply for an extension, you must pay all payment obligations arising on or after 23 July 2020 on time.
You have received a supplementary assessment for payroll tax relating to the month of May 2020. The payment deadline for this supplementary assessment is 25 July. The payment obligation had already arisen on 30 June 2020, when the return was submitted and was due to have been paid. This assessment is therefore covered by the first deferral, so you do not yet need to pay it.
Furthermore, you must submit your VAT return for the second quarter of 2020 by 31 July 2020. The payment obligation arises on 31 July 2020. This tax liability is therefore not covered by the first deferral. The tax assessment must be paid by 31 July 2020 to avoid a penalty for late payment.
Extension granted
If you do not have sufficient funds to pay the new tax liabilities, it is possible to extend the special deferral. You can find more information about the extension in this article: Special payment deferral: an update.
As the deferral has been extended, you do not need to pay the tax assessments you receive in the near future for the time being. These assessments will also be included in the payment plan. The special deferral is temporary and will be withdrawn as soon as circumstances allow.
If you submit a request for an extension, the Tax and Customs Administration may reject this request. During the period it takes the Tax and Customs Administration to decide on your request, the deferral of payment will, of course, continue.
Summer
You can therefore leave the older tax assessments until at least after the summer. As for the new tax liabilities, you will need to decide whether to apply for an extension or to pay them. The main aim is to avoid penalties.