Deferred VAT Payment Scheme

13 May

HMRC have finally published guidance on paying the deferred VAT and will be opening the new payment scheme on 23rd of February. Would it help to pay in instalments? If you join by the 23rd march you can pay it in 11 Instalments but payment has to be by direct debit.

Pay your deferred VAT

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 – the online service is open between 23 February and21 June 2021
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

The New Payment Scheme

You can pay your deferred VAT in full by 31 March 2021 and you do not need to contact HMRC.

If you want to join the new scheme The VAT deferral new payment scheme will be open from 23 February up to and including 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.

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)

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 route for you)

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

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 and that goes down to 8 if you join in June..

Before you join the scheme

Before joining, you must:

create your own Government Gateway account(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 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 pai

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-19helpline when the scheme opens on Telephone: 0800 024 1222. An adviser will help you join.