Updated 15/02/21 – new dates for the upcoming VAT deferral scheme have been released by HMRC

Businesses have been put under huge financial pressure due to the pandemic.

As a result this, HMRC have offered various support arrangements, ranging from support grants to payment deferrals. The first major support scheme saw VAT returns that would normally have been payable between 20 March and 30 June 2020 deferred and payable by 31 March 2021.

HMRC have now confirmed that these VAT returns can now be deferred further under a new payment scheme.

This will be an opt in scheme that will be open between 23rd February and 21st June 2021. Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of January 2022. Further details of the scheme are below.

You must opt in yourself if you would like to use the scheme; an agent cannot do this for you.

If you are not eligible for the new repayment scheme, or you are still unable to pay and need more time, HMRC may be able to offer you a payment plan that factors in your particular circumstances. It is important to give HMRC a call as soon as possible if this is the case – if you fail to make a payment on time without prior approval it may result in surcharges.

The HMRC Business Payments Support Service telephone number is 0300 200 3835 and they are currently open Monday to Friday, 8am to 6pm.

VAT deferment scheme

To use this scheme, you must:

  • still have deferred VAT to pay
  • be up to date with your VAT returns
  • opt in by 21 June 2021
  • pay the first instalment when you opt in

If you opt in to the scheme, you can still have a ‘time to pay arrangement’ for other HMRC debts and outstanding tax.

Before opting in, you must:

  • create your own Government Gateway account if you don’t already have one
  • submit any outstanding VAT returns from the last 4 years
  • 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

Finally, if you’re planning on paying towards the deferred amount before applying to the scheme, do so as soon as possible to allow HMRC to show the correct deferred VAT balance. You should also wait at least a day after such payments to allow the HMRC systems to update.