Paying Deferred VAT

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What is the deferred VAT scheme?

At the start of the coronavirus pandemic in March 2020, HMRC allowed VAT payments due between 20th March 2020 and 30th June 2020 to be deferred until 31st March 2021. This was known as the VAT deferral payment scheme.

Find out more information on the original announcement in our blog post at the time here.

What is the VAT deferral new payment scheme?

Later in 2020, HMRC announced that this deferred payment could be spread throughout 2021. This was known as the VAT deferral new payment scheme. This article provides instructions and information on repaying your deferred VAT.

How to join the VAT deferral new payment scheme?

Joining the VAT deferral new payment scheme is not automatic. You must therefore notify HMRC that you wish to join this scheme.

  1. Visit this page, scroll down and click the "Join the scheme now" button.
  2. It will then ask you to sign into your government gateway account (if you do not have a government gateway account you can create one by following instructions found here)
  3. Read through the proposed terms and conditions. If you are happy to proceed, push "accept and continue".
  4. Review the statement of your VAT account provided by HMRC. If it looks correct press continue.
  5. Select how many instalments you want to pay in. Note: By default this will be set to the maximum number of instalments available. This is the best for your cashflow. If you want to repay your liability sooner, you must select how many instalments you would prefer.
  6. Select which date you want your payments to be collected each month.
  7. This will produce your payment plan.
  8. Review and if you are happy to proceed, press continue.
  9. Select the bank account details that you want the DD to be set-up with.
  10. Review the Direct Debit Guarantee - Click Confirm
  11. This should take you to a confirmation page. We suggest printing/saving this page as a PDF for your records.

If you have already repaid your VAT in full or intend to by 31st March 2021?

If you have already (or intend to) repaid your VAT bill for the deferred VAT period in full before 31st March 2021 then you do not need to contact HMRC.

Is there interest charged by HMRC on the deferred VAT?

No.

What is the deadline for joining the VAT deferral new payment scheme?

If you want to split the payment by the full 11 instalments then the deadline is 19th March 2021.

If you want to split the payment into fewer instalments then the final deadline is the 21st June 2021.

What happens if your business is unable to pay its deferred VAT?

If you need to break/change the payment scheme that you have set-up above OR if you simply just cannot afford to pay then you must contact HMRC as soon as possible here. Before you do this we recommend reading our blog post on making payment plans with HMRC here.

Too Long Didn't Read (TL;DR)

Go to this page, scroll down to the green "join this scheme now" and click. Login and follow the on screen instructions. Deadline 21st June 2021.

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