For businesses who deferred VAT payments due between 20 March 2020 and 30 June 2020, a decision must be made before 31st March 2021 on how to settle these outstanding liabilities.

Businesses have options and can either:

  • Pay the deferred VAT in full, on or before 31st March 2021.
  • Opt-in to the new HMRC VAT deferral scheme (see below).
  • Contact HMRC on telephone (0800 024 1222) before 30th June 2021, if greater time is required to pay.

The new VAT deferral scheme will go live from 23rd February up to 21st June 2021.  The scheme will allow businesses to spread their due payment, in equal instalments, interest free, over a period of up to 11 months, depending on when you join.

If businesses join by:

  • 19 March 2021 – 11 instalments are available.
  • 21 April 2021 – 10 instalments are available.
  • 19 May 2021 – 9 instalments are available.
  • 21 June 2021 – 8 instalments are available.

This is an online application process and businesses will have to opt-in to this scheme, to notify HMRC of their intention to spread this payment.  This is not an automatic process.

The key criteria to be able to use the scheme are:

  • Businesses must have a deferred VAT payment from between 20 March and 30 June 2020.  This scheme cannot be used for any liabilities after this period.
  • Businesses must be up to date with their VAT return filings.
  • The first instalment must be paid on joining the scheme.
  • A direct debit plan to pay the instalments must be setup.

Unfortunately, agents cannot do this on behalf of a client, clients will need to do this themselves.  This will need to be done through a Government Gateway account.  For any businesses who do not have a Government Gateway account, it is advisable to set this up as soon as possible to avoid any significant delay in joining the scheme.

Just click on the green ‘sign-in’ button and then the ‘create sign in details’ on the link below to get started with this:

The deadline for opting into the scheme is 21 June 2021.  It should be noted that failure to opt-in to the scheme or pay the full deferred VAT liability by 31st March 2021, will result in interest being charged and a potential late payment penalty.

If you would like to speak to a member of our team about the VAT Deferral Scheme then please do not hesitate to contact us.

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