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Extension to the VAT deferral scheme

Extension to the VAT deferral scheme

Kevin Cooper

23 February 2021 - UPDATE: The Online payment portal for the new VAT deferral payment scheme is now open for businesses who deferred. You can find the scheme by clicking here.

During 2020 many organisations were able to take advantage of the Coronavirus VAT payment deferral scheme, the scheme allowed them to defer VAT payments that fell between 20 March 2020 and 30 June 2020 until 31 March 2021. With that deadline fast approaching and in consideration of the continued difficulties businesses have faced, HMRC have released the current options available for organisations which need to pay VAT.
  • pay the deferred VAT in full on or before 31 March 2021
  • opt in to the VAT deferral new payment scheme when it launches in 2021
  • contact HMRC if you need more help to pay

If you want to opt in to the new payment scheme

Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022.

The scheme will allow you to:
  • pay your deferred VAT in instalments without adding interest
  • select the number of instalments from 2 to 11 equal monthly payments

To use this scheme, you must:
  • still have deferred VAT to pay
  • be up to date with your VAT returns
  • opt-in before the end of March 2021
  • pay the first instalment before the end of March 2021
  • be able to pay the deferred VAT by Direct Debit

If you opt-in to the payment scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.

How to prepare for the new payment scheme

Before opting in you must:
  • create your own Government Gateway account if you don’t already have one
  • submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
  • correct errors on your VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in your deferred VAT balance
  • make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid

You should also:
  • pay what you can as soon as possible to allow HMRC to show the correct deferred VAT balance
  • consider the number of equal instalments you’ll need, from 2 to 11 months

Although we cannot opt in for you, if you require help regarding this payment scheme or VAT please contact a member of our local tax specialist team here.