HMRC has recently issued a number of updates in relation to the Covid-19 VAT payment deferral scheme.
Many organisations took advantage of the VAT payment deferral scheme which allowed businesses to defer VAT payments falling due between 20 March 2020 and 30 June 2020 until 31 March 2021. If an organisation still has unpaid deferred VAT amounts, it has three options available:
- pay the deferred VAT in full now or by 30 June 2021 at the latest
- join the VAT deferral new payment scheme – the online service opened on 23 February 2021 and closes on 21 June 2021
- contact HMRC on 0800 024 1222 by 30 June 2021 if you need extra help to pay
You may be charged a 5% penalty or interest if you do not pay in full or make an arrangement to pay by 30 June 2021.
Pay your deferred VAT in full
If you were unable to pay in full by 31 March 2021, you may still be able to avoid being charged penalties or interest by either:
- joining the new payment scheme by 21 June 2021
- paying your deferred VAT in full by 30 June 2021
Join the VAT deferral new payment scheme
The new scheme allows you to:
- 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 date when you decide to join the scheme will determine the maximum number of instalments that are available to you.
The following table 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/joined by | Number of instalments available to you |
| 19 March 2021 | 11 |
| 21 April 2021 | 10 |
| 19 May 2021 | 9 |
| 21 June 2021 | 8 |
How to join
Before joining, you must:
- have your VAT registration number
- 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 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 want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)
Full details on how to join can be found here Pay VAT deferred due to coronavirus (COVID-19) – GOV.UK (www.gov.uk)
Samantha Sanders BSc (Hons) ACCA is an Assistant Manager within the Business Services Team at A C Mole & Sons Taunton office and regularly assists clients with VAT queries. She can be contacted on 01823 624450 or SSanders@acmole.co.uk.
