In order to support businesses during the Covid-19 pandemic, UK VAT registered businesses were able to defer VAT payments due between 20 March and 30 June 2020.
If you deferred VAT payments and you still have payments to make, you can:
- pay the deferred VAT in full, on or before 31 March 2021,
- join the VAT deferral new payment scheme,
- contact HMRC on Telephone: 0800 024 1222 by 30 June if you need extra help to pay.
HMRC did not charge interest or penalties on any amount deferred. However, during the deferral period, VAT returns still had to be filed, and the normal filing deadlines continued to apply. You may now be charged interest or a penalty if you do not:
- pay the deferred VAT in full by 31 March 2021,
- opt into the new payment scheme between 23 February and 21 June 2021,
- contact HMRC on 0800 024 1222 by 30 June 2021 if you need extra help to pay.
If you choose to pay your deferred VAT in full by 31 March 2021 you do not need to contact HMRC.
How does it work?
The new payment scheme allows you to:
- pay your deferred VAT in smaller monthly instalments, interest free,
- choose the number of instalments, from 2 to 11 (depending on when you join) but all instalments must be paid by the end of March 2022.
How do I opt in to the scheme?
The scheme will be available through an online service, open from 23 February up to and including 21 June 2021. If you are on the VAT Annual Accounting Scheme or Payment on Account Scheme, you will be invited to join later in March 2021.
Before your business can use this new VAT deferral scheme you must:
- be the business Owner / Director with authority to set up Direct Debit payment,
- create your own Government Gateway account (if you do not already have one),
- still have deferred VAT to pay,
- be up to date with your VAT returns,
- correct any errors on past VAT returns,
- know how much VAT was deferred,
- know how much of that deferred VAT debt is still outstanding,
- join by 21 June 2021,
- pay the first instalment when you join.
You can join the scheme and also have a Time to Pay arrangement for other HMRC debts and outstanding tax.
The Government wants all of the deferred VAT paid by 31 January 2022, so the later you sign up to this scheme to spread the payments, the fewer instalments will be available to it.
For example, if you join the scheme by 19 March you can spread the payments over 11 instalments starting in March 2021, but if you join in June 2021 you can only spread the debt over eight instalments.
If you are unable to use the online portal, (for example because you do not have a UK bank account, cannot pay by direct debit or have dual signatories on your account), you should call HMRC on 0800 024 1222, from 23 February, to arrange a payment plan.
More information can be found in HMRC’s guidance on GOV.UK.
How can we help?
We are available for advice or if you have any other business concerns following the latest government updates, contact your usual relationship practitioner, email email@example.com or call us on 0161 905 1616.