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February 25, 2021

HMRC’s VAT Deferral New Payment Scheme Now Open

As part of the government’s coronavirus measures, businesses were given the option to defer their VAT payments between 20 March 2020 and 30 June 2020 under the VAT Payment Deferral Scheme.

Initially, they were given until 31 March 2021 to pay any VAT liability accumulated in that period. However, it was later announced as part of the government’s Winter Economy Plan that these businesses would be able to opt to pay their VAT liability in up to 11 equal instalments over 2021-22 (interest free) using the VAT Deferral New Payment Scheme.

Your Options

In effect, if you deferred your VAT liability as part of the VAT Payment Deferral Scheme, you currently have three options for paying this:

  • Pay the full amount of deferred VAT on or before 31 March 2021.
  • Sign up to use the VAT Deferral New Payment Scheme before 21 June 2021.
  • Call HMRC on 0800 024 1222 before 30 June 2021 to discuss extra help with paying the deferred VAT.

The VAT Deferral New Payment Scheme

The online sign up for the VAT Deferral New Payment Scheme opened on 23 February 2021 and the link to sign up can be found here.

However, if you use the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme you will only be able to sign up in March 2021.

In practice, the scheme works as follows:

  • The deferred VAT liability can be paid in up to 11 equal instalments – however, the full amount must be paid by the end of March 2022.
  • The first instalment must be paid at the time of joining the scheme.
  • Subsequent instalments must be made in consecutive months.
  • The maximum number of instalments available will be determined by the date that you join the scheme. HMRC have provided the following table to explain this:
Date joined by:           Number of instalments available:
19 March 2021 11
21 April 2021 10
19 May 2021 9
21 June 2021 8
  • The instalments must be paid by Direct Debit.

However, you will not be able to join the scheme if you are not up to date with your VAT returns (i.e. any outstanding VAT returns from the last four years would need to be submitted (and corrected if there were any errors) in order to join the scheme).

If you have deferred your VAT liability and require assistance in relation to this, please contact a member of our team.

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