If your business took advantage of the option to defer VAT due between 20 March and 30 June 2020 you can now consider how you wish to pay the liability. You can, of course, pay it in full but if that will cause cash flow problems you can apply to defer the payment equally over 2 to 11 months. On 23rd February 2021 HMRC will be opening the new VAT deferral scheme enabling you to arrange this simply online through your government gateway.
Your options are::
- pay the deferred VAT in full, on or before 31 March 2021
- join the VAT deferral new payment scheme – the online service is open between 23 February and 21 June 2021
- contact HMRC on Telephone: 0800 024 1222 by 30 June if you need extra help to pay
You may 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 by 21 June 2021
- agree extra help to pay with HMRC by 30 June 2021
If you choose the new deferment scheme, the payments will be interest free and you can choose the number of instalments up to a maximum of 11. Please note that the first instalment will need to be paid immediately on setting up the scheme. You will need to know how much you have deferred and how much you have paid towards it, if anything.
When you join the scheme will dictate the maximum payments you can make as follows:
| 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 |
To use the online service, you must:
- join the scheme yourself, we are unable to do this for you
- still have deferred VAT to pay
- be up to date with your VAT returns for the last 4 years
- 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.
If you do not have a government gateway account you can create one here
Here is the complete guidance from HMRC
For details on other help for businesses due to coronavirus