Previously, businesses were able to defer VAT payments due between 20 March 2020 and 30 June 2020 where they were unable to meet their VAT liabilities. If you took advantage of this deferral and still have payments to make, you have several options available:
- Pay the full deferred VAT, on or before 31 March 2021
- Join the VAT deferral payment scheme; this online services is open between 24 February 2021 and 21 June 2021
- Call HMRC on 0800 024 1222 by 30 June 2021 if you need extra help to pay
If you join the deferral scheme by 19 March, you could benefit from the maximum 11-month instalment plan. If you can pay your deferred VAT in full by 31 March 2021 and choose to do so, you do not need to contact HMRC, you can just make the payment and are not required to register for any payment scheme.
The VAT deferral new payment scheme
All VAT registered businesses who deferred VAT payments last year should now be able to access the scheme (businesses on the Annual Accounting or Payment on Account schemes were delayed until 10 March 2021.), which has been live from 24 February.
The new scheme will allow you to:
- Pay your deferred VAT in equal, interest free instalments
- Choose the number of instalments from 2 to 11, although this is dependant on when you join
When you join the scheme will determine the maximum number of instalments that are available. Joining the scheme in March will allow you to pay your deferred VAT in up to 11 instalments. Below are the monthly joining deadlines, allowing for direct debit processing and including the first payment:
|If you join by||Number of instalments available to you|
|19 March 2021||11|
|21 April 2021||10|
|19 May 2021||9|
|21 June 2021||8|
There are some conditions that need to be met before businesses can join the scheme:
- If you do not already have a Government Gateway account you will need to create one
- Any outstanding VAT returns from the last 4 years will need to submitted, if not you will not be able to join the scheme
- Any errors on VAT returns need to be corrected as soon as possible
- Make sure you know how much you owe, including the amount you originally deferred and ow much you may have already paid
Assuming these conditions have been met, to use the online service you must:
- Join the scheme yourself, your agent cannot do this on your behalf
- Have deferred VAT to pay
- Continue to be up to date with your VAT returns
- Be able to pay the first instalment when you join
- Pay your instalments by Direct Debit
- Join by 21 June 2021
If you are unable to use the online service yourself, HMRC have confirmed there is a COVID-19 helpline (0800 024 1222) which can be used and an adviser will help you join.
Additionally, it is worth noting that you may be charged penalties or interest if you do not:
- Pay the deferred VAT in full by 31 March 2021, or;
- Join the new payment scheme by 21 June 2021, or;
- Contact HMRC to agree extra help to pay by 30 June 2021.