The VAT deferral new payment scheme is now open and will close on 21 June 2021.
The scheme enables VAT payments deferred between 20 March and 30 June 2020 to be paid in equal instalments, interest free.
Options for paying deferred VAT
Businesses may be charged a 5% penalty or interest if they do not pay in full or make an arrangement to pay by 30 June 2021.
If the deferred VAT was not paid in full by 31 March 2021, a late penalty or interest charge may still be avoided by either:
- Joining the new payment scheme by 21 June 2021; or
- Paying the deferred VAT in full by 30 June 2021
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 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.
Users of the VAT Annual Accounting Scheme and the VAT Payment on Account Scheme are also now able to join this scheme.
Outstanding VAT returns
One of the eligibility conditions is the requirement for no outstanding VAT returns. This means you will be required to submit your quarterly return slightly earlier than usual in order to qualify for the varying number of payment instalments detailed above. So: –
- If joining by 21 April, with a quarter ending in March, your return must have been submitted by 21 April rather than the usual due date of 7 May;
- If joining by 19 May, with a quarter ending in April, your return must have been submitted by 19 May rather than the usual due date of 7 June; and
- If joining by 21 June, with a quarter ending in May, your return must have been submitted by 21 June rather than the usual due date of 7 July.
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.