The HMRC VAT Deferral New Payment Scheme is now open which enables VAT payments deferred between 20 March 2020 and 30 June 2020 to be paid in equal instalments – all instalments must be paid by the end of January 2022.
You must ensure you have decided how to manage the VAT that was deferred – an application has to be made to HMRC to access the new payment scheme.
You can either:
- pay the deferred VAT in full by 31 March 2021;
- opt into the VAT Deferral New Payment Scheme by 21 June 2021; or
- contact HMRC on 0800 024 1222 if you need extra help with payment, by 30 June 2021.
Please be aware that if you do not choose one of the above options, you may incur interest and/or penalties.
How Do I Join?
Instead of paying the full amount by the end of March 2021, up to ten monthly instalments can be made, interest free. The earlier you opt in, the more instalments are available to help spread the cost, as follows:
- by 21 April 2021: ten payment instalments
- by 19 May 2021: nine payment instalments
- by 19 June 2021: eight payment instalments
Users of the VAT Annual Accounting Scheme and the VAT Payment on Account Scheme are also able to join the deferral scheme.
To access the online service, you must:
- be up-to-date with VAT returns;
- still have deferred VAT to pay;
- have joined by 21 June 2021;
- pay the first instalment on joining; and
- pay instalments by direct debit – the set up of a direct debit arrangement must be done by the business, therefore HMRC is unable to provide an agent service for this scheme.
If you aren’t able to pay by direct debit, HMRC has provided an alternative option to call the Covid-19 helpline on 0800 024 1222 where you can speak to an adviser.
How Do I Opt In?
Before you opt in, you must:
- create a Government Gateway account;
- submit any outstanding VAT returns from the last four years;
- correct any errors on submitted VAT returns as soon as possible – corrections received after 31 December 2020 may not show in the deferred VAT balance;
- make sure you know the amount that is owed, including the amount originally deferred and how much has already been paid.
In the recent 2021 Budget, the Chancellor announced that a penalty totalling 5% of any VAT still outstanding for payment as at 31 March 2021 will be charged if you have not opted in to the new payment scheme or made an alternative arrangement to pay by 30 June 2021.
If you are not able to make the VAT payments, you may be able to agree a Time to Pay arrangement with HMRC. For further information, please visit their website: https://www.gov.uk/difficulties-paying-hmrc.
For guidance, please click on the link: https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19.