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11 February 2021

Reminder // Paying Deferred VAT Liabilities

In response to the pandemic, the Government provided several incentives to support individuals and businesses through a financially challenging time.

One such facility was the ability for businesses to choose to defer their VAT payments between 20th March, 2020, and 30th June 2020.

Businesses now have two options:

  1. Pay the deferred VAT in full on, or before, 31st March, 2021.
  2. Choose to spread the liability over 2 – 11 interest-free payments up to 31st March, 2022. This is called the ‘New Payment Scheme’.

If you wish to take advantage of option two, HMRC has released guidance on how taxpayers will be able to sign up for this. It will be available between the 23rd February, 2020, and 21st  June, 2021.

To be eligible for this scheme a business must:

  • Still have deferred VAT to pay
  • Be up to date with its VAT returns
  • Be able to pay the deferred VAT by Direct Debit
  • Join by the 21st June, 2021
  • Opt in and pay the first instalment by 21st June 2021
  • All instalments must be paid by the end of March, 2022
If you join by:                                     Number of instalments available to you:
19 March 202111
21 April 202110
19 May 20219
21 June 20218

Before joining, you must:

  • 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 will 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

Businesses which opt into the scheme will still be able to request a Time to Pay arrangement for other HMRC debts and outstanding tax.

Please note that your agent cannot opt into this on your behalf.