New VAT deferral payment scheme opens from 23 February 2021

Do you need to register your business?

Businesses which deferred VAT payments due between 20 March and 30 June 2020 and still have payments to make 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 and 21 June 2021
  • Contact HMRC on Telephone: 0800 024 1222 by 30 June if they need extra help to pay

Businesses may be charged interest or a penalty if they 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 VAT deferral new payment scheme

The VAT deferral new payment scheme will be open from 23 February up to and including 21 June 2021.

Businesses using the VAT annual accounting scheme or the VAT payments on account scheme will be invited to join the new scheme in March 2021.

The VAT deferral new payment scheme lets businesses:

  • Pay the deferred VAT in equal instalments, interest free
  • Choose the number of instalments, from 2 to 11 (depending on when the scheme is joined)

The month in which businesses join will determine the maximum number of instalments that can be made.

If Scheme joined by:Number of instalments avaialble:
19 March 202111
21 April 202110
19 May 20219
21 June 20218

Conditions to join

To join this scheme online, businesses must:

  • Still have deferred VAT to pay;
  • Have a government gateway account;
  • Be up to date with all VAT returns from the last 4 years;
  • Join the scheme themselves by 21 June 2021 (An agent cannot do this on behalf of businesses);
  • Know how much is owed, including the amount originally deferred and how much may have already been paid
  • Pay the first instalment when joining; and
  • Be able to pay the deferred VAT by Direct Debit.

If businesses cannot use the online service, for example if they cannot pay by direct debit, it may still be possible to join the scheme using an alternative entry route by contacting the COVID-19 helpline on 0800 024 1222 when the scheme opens.

Error corrections

Businesses may be able to include additional amounts owing resulting from error corrections, which relate to a period covered by the VAT deferral, in the VAT deferral new payment scheme.

Businesses which want to include extra amounts owing resulting from error corrections, which relate to a period covered by the VAT deferral, need to contact the COVID-19 helpline on 0800 024 1222 after both of the following have happened:

  • HMRC have processed the error correction; and
  • A statement of account confirming the balance has been received from HMRC.

It is therefore essential that businesses which want to include error correction amounts owing in the VAT deferral new payment scheme correct errors as soon as possible and before joining the scheme. Additional amounts owing cannot be included after a business has joined the scheme and any errors corrections notified after 31 March 2021 cannot be included in the scheme.

Businesses which join the scheme can still have a time to pay arrangement for other HMRC debts and outstanding tax.

Further information can be found here.

Contact us

For further advice, including support around correcting errors and when to join the scheme please contact:

Hydeam Sulton – hydeam.sulton@taitwalker.co.uk
Louise Phillipps – louise.phillipps@taitwalker.co.uk
Ryan Griffiths – ryan.griffiths@taitwalker.co.uk