COVID-19 VAT Deferral: New VAT Payment Scheme Details announced

If your business took advantage of the opportunity to defer VAT payments for the period from 20 March to 30 June 2020, the deadline of 31 March 2021 for making repayment is fast approaching. However, taxpayers will have the option to pay back their VAT over an 11 month period if they meet certain criteria via the VAT Deferral New Payment Scheme.

HMRC has announced further details about the on-line service for opting into the new payment, opting into the scheme will be possible until 21 June 2021 (further guidance can be found on the Government website). The VAT deferral new payment scheme is open from 23 February 2021 up to and including 21 June 2021.

If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you will be invited to join the new payment scheme later in March 2021.

The new scheme lets you:

• pay your deferred VAT in equal instalments, interest free
• choose the number of instalments, from 2 to 11 (depending on when you join)

Criteria to join the scheme

• Create a 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

To use the online service, you must:

• join the scheme yourself, your agent cannot do this for you
• still have deferred VAT to pay
• be up to date with your VAT returns
• join by 21 June 2021
• pay the first instalment when you join
• pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)

VAT Instalment options

Businesses can decide to join between 23 February and 21 June 2021. When a business opts in will determine the number of instalment payments that will need to be made:

For further details and guidance, in addition to the Government resources, you can visit https://www.macintyrehudson.co.uk/publications/article/covid-19-vat-deferral