VAT deferral new payment Scheme

The VAT deferral new payment scheme is for businesses that still owe VAT that was due between 20 March 2020 and 30 June 2020, businesses can apply to pay the outstanding VAT in interest free monthly instalments. 

Eligible businesses are able to make payments in up to 11 monthly interest free instalments. The number of instalments available to a business will depend on when they join the scheme. If a business joins the scheme in March 2021, it will be able to make the payments in 11 monthly instalments, the later a business joins, the less number of instalments will be available to it.

The scheme is expected to open on the 23rd February 2021, eligible businesses can opt in from the end of February 2021. The scheme will be open until the end of June 2021.

Applications to opt in the scheme can be made online, it is not necessary to call HMRC unless you need extra help.

Interest will be charged on outstanding VAT if a business does not opt into the scheme by 21 June 2021, doesn’t pay outstanding amounts by 31 March 2021 and doesn’t call and agree to extra help with HMRC.

Businesses on the Annual VAT Accounting Scheme or the VAT Payment on Account Scheme will be invited to join the scheme during March 2021.

To use the scheme, the following conditions apply, a business must:

  • Still have deferred VAT to pay
  • Join by 21st June 2021
  • Pay instalments by direct debit. HMRC have listed 3 instances here  where if it is not possible to pay by direct debit, you can give them a call on the Covid-19 helpline – 0800 024 1222 to get help joining the scheme
  • Be up to date with all VAT return submissions
  • Opt in yourself (you will need to have a HMRC gateway account), your Accountant will not be able to opt in on your behalf.
  • Pay the first instalment when you join

You can still have other Time to pay arrangements for other HMRC debts, as well as utilising the scheme.

Additional information on the scheme can be found on HMRC’s website – here

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