Covid VAT deferral payment scheme

If your business deferred VAT due from 20 March to 30 June 2020 and you still have payments to make, you can now opt into the VAT deferral new payment scheme to pay your deferred VAT over a longer period. The payment scheme is expected to open on 23 February 2021 and close on the 21 June 2021.

If you're on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you'll be invited to join the new payment scheme later in March 2021.

It is important to note, that you may be charged interest or a penalty if you do not:

  • Pay the deferred VAT in full by 31 March 2021
  • Opt into the new payment scheme by 21 June 2021
  • Agree extra help to pay with HMRC by 30 June 2021

The new VAT deferral payment scheme lets you:

  • Pay your deferred VAT in equal instalments, interest free
  • Choose the number of instalments, from 2 to 11 (depending on when you join)

To use the online service, you must:

  • Join the scheme yourself, your agent cannot do this for you.
  • Still have deferred VAT to pay
  • Be up to date with your VAT returns
  • Join by 21 June 2021
  • Pay the first instalment when you join
  • Pay your instalments by Direct Debit (if want to use the scheme but cannot pay by Direct Debit, there's an alternative entry routefor you)

If you join the scheme, you can still have a Time to pay arrangement for other HMRC debts and outstanding tax.

Instalment options available to you

The month you decide to join the scheme will determine the maximum number of instalments that are available to you. If you join the scheme in March, you'll be able to pay your deferred VAT in 11 instalments or fewer and so on, for example:

If you join by:

No of instalments

19-Mar-21

11

21-Apr-21

10

19-May-21

9

21-Jun-21

8

Before you join the scheme

Before joining the scheme, you must do the following:

  • Create your own Government Gatewayaccount (if you do not already have one)
  • Submit any outstanding VAT returns from the last 4 years – otherwise you'll not be able to join the scheme
  • Correct errors on your VAT returnsas soon as possible
  • Make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid