The VAT deferral new payment scheme will open between 23 February 2021 and 21 June 2021.
The scheme enables VAT payments deferred between 20 March and 30 June 2020 to be paid in equal instalments, interest free.
VAT can either be paid through the deferral scheme OR paid in full, on or before 31 March 2021.
Options for paying deferred VAT
There are three main options for paying deferred VAT
- The deferred VAT is paid in full by 31 March 2021; or
- The VAT deferral new payment scheme is opted into by 21 June 2021; or
- Extra help with payment is agreed with HMRC by 30 June 2021.
If none of these options are actioned, interest or a penalty may be charged.
How to join the VAT deferral new payment scheme
The VAT deferral scheme enables payment to be made in equal instalments, these can be between two and eleven instalments, depending on when the scheme is joined.
Joining dates and the maximum number of payment instalments available
- By 19 March 2021: eleven payment instalments;
- By 21 April 2021: ten payment instalments;
- By 19 May 2021: nine payment instalments; and
- By 21 June 2021: eight payment instalments.
The deadlines above allow for Direct Debit processing.
To access the online service, users must
- Still have deferred VAT to pay;
- Be up to date with VAT returns;
- Have joined by 21 June 2021;
- Pay the first instalment on joining;
- Pay instalments by Direct Debit, however if payments cannot be made by Direct Debit there is an alternative payment option, click here for details.
How to apply
Prior to joining the scheme, users must
- Create their own Government Gateway account;
- Submit any outstanding VAT returns from the last four years;
- Correct errors on VAT returns as soon as possible; and
- Have clarity of the amount owed, including the amount originally deferred and how much has already been paid.
Payments resulting from error corrections can also be deferred, providing HMRC have processed the error correction and a statement of account has been received confirming the balance. This can be arranged by contacting HMRC on 0800 024 1222.
Extra payments cannot be included after joining the VAT deferral new payment scheme. Any error correction relating to the deferral period that is notified to HMRC after 31 March 2021, cannot be deferred.
HMRC may get in contact if they carry out a VAT compliance check and find that extra payments are due for the deferral period.