VAT Payment Deferral Options
February 23, 2021
VAT payments that were deferred from last year can be spread over the next 11 months.
COVID-19 – VAT payment deferral options
It has almost been one year since the UK Government announced that certain VAT payments could be deferred to support businesses during the COVID -19 pandemic. The VAT deferral was available to all UK VAT registered businesses with payments due between 20 March 2020 and 30 June 2020, except for the VAT MOSS payments. In addition to this announcement, HMRC stated they would not charge any interest or penalties, but instead requested all VAT returns during this period be filed as normal with all filing deadlines still fully applicable. As the VAT payment deferral was automatic with no application or notification required to HMRC, we outline below the options currently available to you.
When do I need to pay my deferred VAT payment?
Initially, when the deferral was announced, businesses were given a deadline of 31 March 2021 to pay any VAT liabilities. However, a further announcement was made on 24 September 2020 in the Chancellor’s Winter Economy Plan, stating that instead of a hard deadline of 31 March 2021, businesses will also have the choice of making up to eleven equal instalments via the VAT deferral new payment scheme.
What are my payment options?
If you have deferred VAT payments due between 20 March 2020 and 30 June 2020 and have yet to make the payment, you can choose from the following to avoid any interest or penalties being charged:
- Pay the deferred VAT in full on or before 31 March 2021.
- Join the VAT deferral new payment scheme via the online service within your Government Gateway account which opens between 23 February 2021 and 21 June 2021
- Speak to HMRC by 30 June 2021 if you need extra help to pay.
How do I join the VAT deferral new payment scheme?
The VAT deferral new payment scheme will commence via an online service within your Government Gateway account from 23 February 2021 to 21 June 2021 and will allow you to pay your deferred VAT in equal instalments, interest–free. You have the option to choose the number of instalments you wish to pay, depending on when you join the scheme.
The number of instalments available to you is determined by the month in which you join the scheme. As the scheme is available to join until 21 June 2021, this is the last date you can join to qualify for paying in instalments, with all instalments needing paid by the end of March 2022.
The table below extracted from HMRC guidance, outlines the cut–off dates for joining the scheme as well as the maximum number of instalments available, 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|
Monthly joining deadline (HMRC 2021)
Please note that if you are on the VAT Annual Accounting Scheme or the VAT Payment on Account scheme you will not be able to join from 23 February 2021, instead, you will be invited to join towards the end of March 2021.
Can anyone join the VAT payment new deferral scheme?
To use the online service, you must join the scheme yourself, your agent cannot complete this for you. You must also meet the following criteria:
- Have deferred VAT to pay
- Pay your first instalment when you join
- Ensure all of your VAT returns have been submitted from the past 4 years
- Pay by direct debit but if this is not possible speak to an advisor on the COVID-19 helpline on 0800 024 1222
- Have access to your own Government Gateway account to join the scheme
- Know exactly how much you owe HMRC
If any businesses would like to join the new payment scheme but do not have access to a UK bank account, are unable to pay by direct debit, or have dual signatories on their bank account, we would encourage you to contact the COVID-19 helpline on 0800 024 1222.
For further information please see HMRC’s guidance here