VAT deferred payments – Updated 11 Feb 2021

HMRC announced that all UK VAT registered businesses that had a VAT payment due in the period 20 March 2020 to 30 June 2020 could defer payment until 31 March 2021.

Businesses can now opt-in to make between two and eleven smaller, equal, interest free payments between March 2021 and March 2022 if they are unable to pay the full liability before 31 March 2021. If the business does not opt into the scheme, the full VAT liability must be paid by 31 March 2021.

If you want to join the new scheme

The VAT deferral new payment scheme will be open from 23 February up to and including 21 June 2021.

If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you’ll be invited to join the new payment scheme later in March 2021.

The new scheme lets you:

• pay your deferred VAT in equal instalments, interest free
• choose the number of instalments, from 2 to 11 (depending on when you join)

To use the online service, you must:

• Join the scheme yourself – your agent cannot do this for you
• Still have deferred VAT to pay
• Be up to date with your VAT returns
• Join by 21 June 2021
• Pay the first instalment when you join
• Pay your instalments by Direct Debit (if want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)

If you join the scheme, you can still have a Time to Pay arrangement for other HMRC debts and outstanding tax.

Instalment options available to you

The month you decide to join the scheme will determine the maximum number of instalments that are available to you. If you join the scheme in March, you’ll be able to pay your deferred VAT in 11 instalments or fewer.

The table below sets out the monthly joining deadlines (to allow for Direct Debit processing) and the corresponding number of maximum instalments (including the first payment):

Before you can join the scheme you must:

• Create your own Government Gateway account (if you do not already have one)
• Submit any outstanding VAT returns from the last 4 years – otherwise you’ll not be able to join the scheme
• Correct errors on your VAT returns as soon as possible
• Make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

There may be circumstances where you cannot use the online service, for example if you:

• Do not have a UK bank account
• Cannot pay by Direct Debit
• Have dual signatories on your account

If you want to join the new payment scheme, but cannot use the online service, contact the COVID-19 helpline when the scheme opens on Telephone: 0800 024 1222. An adviser will help you join.

If you have any questions or need any assistance with opting into the scheme please contact Yvonne Collings at [email protected] or you can call her on 01243 782 423.