Deferred VAT payments

The new VAT deferral payment scheme – how will it work?

Taxpayers who deferred VAT payments between 20 March and 30 June 2020 who still have outstanding amounts due to HMRC can either:

  • Pay the deferred VAT in full on or before 31 March 2021; or
  • Opt in to the new VAT deferral payment scheme when it launches in 2021 and pay the outstanding amounts by 31 March 2022.

HMRC have recently announced taxpayers wishing to use the new VAT deferral payment scheme must opt in before 31 March 2021. This is done using the online process via the Government Gateway which will be available in early 2021. Under the payment scheme taxpayers can make up to 11 equal monthly payments, interest free. All instalments must be paid by the end of March 2022.

To use this scheme taxpayers must:

  • Still have deferred VAT to pay;
  • Be up to date with all VAT returns;
  • Opt in before the end of March 2021;
  • Pay the first instalment before the end of March 2021; and
  • Be able to pay the deferred VAT by Direct Debit.

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

HMRC’s guidance and the conditions of the new VAT deferral payment scheme.

Contact us

For further advice, please contact Hydeam Sulton (hydeam.sulton@taitwalker.co.uk) or Louise Phillipps at (louise.phillipps@taitwalker.co.uk).