Deferred VAT Payments – New Payment Scheme

If you deferred VAT payments due between 20 March and 30 June 2020 and still have payments to make, you can:

• pay the deferred VAT in full, on or before 31 March 2021
• join the VAT deferral new payment scheme online service
• contact HMRC on Telephone: 0800 024 1222 by 30 June if you need extra help to pay

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

When will the scheme go live?

The VAT deferral new payment scheme will be open from 23 February up to and including 21 June 2021, however, 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.

The new 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)

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.

The table below sets out the monthly joining deadlines (to allow for Direct Debit processing) and the corresponding number of maximum instalments (including the first payment):

If you join by:                    Number of instalments available to you:

19 March 2021                   11

21 April 2021                      10

19 May 2021                       9

21 June 2021                      8

Before you join the scheme

Before joining, you must:

• create your own Government Gateway account (if you do not already have one) https://www.gov.uk/log-in-register-hmrc-online-services
• 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 returns as 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

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

If you cannot use the online service

There may be circumstances where you cannot use the online service, for example if you:

• do not have a UK bank account
• cannot pay by Direct Debit
• have dual signatories on your account

If you want to join the new payment scheme, but cannot use the online service, contact the COVID-19 helpline when the scheme opens on Telephone: 0800 024 1222. An adviser will help you join.

For full details of the scheme visit –

https://www.gov.uk/guidance/deferral-of-vat-payments-due-to-coronavirus-covid-19