HMRC’s VAT Deferral New Payment Scheme to close this month
Businesses that deferred VAT payments last year have less than a week left to join the VAT Deferral New Payment Scheme. The deadline to join the scheme is 21 June 2021, when the online portal for paying monthly instalments will close.
About the scheme
The VAT deferral new payment scheme is open for all businesses who deferred paying VAT due between 20 March and 30 June 2020 and were unable to pay in full by 31 March 2021. If you apply to spread your payments between 20 May and 21 June you can pay in eight instalments.
You may be charged a 5% penalty and/or interest if you do not sign up to the VAT deferral scheme by the deadline of 21 June, or pay in full by 30 June. Alternatively, you can get in touch with HMRC to make an alternative arrangement to pay by 30 June 2021.
Over half a million businesses deferred £34 billion in VAT payments due between March and June 2020 under the VAT Payment Deferral Scheme. Businesses had until 31 March 2021 to pay this deferred VAT. If they could not afford to pay, they could go online from 23 February and set up a new payment scheme to pay by monthly instalments.
Joining the scheme
Before joining you must:
- Have your VAT registration number
- Join by 21 June 2021
- 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. This must include the amount you originally deferred and how much you 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 left to pay
- Be up to date with your VAT returns
- 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)
Further information on joining the scheme can be found by visiting the Gov.UK website
Jim Harra, HMRC’s Chief Executive, said:
‘Businesses that deferred paying their VAT last spring have until 21 June to join the VAT Deferral New Payment Scheme online. They should act now to avoid missing out on this opportunity to spread payment of their deferred VAT across monthly, interest-free, instalments.
‘The new payment scheme is part of the Government package of support worth over £350 billion to help protect millions of jobs and businesses during the pandemic and as we emerge on the path to recovery.
‘HMRC will continue to do all we can to help businesses as they reopen and rebuild.’
If you have any questions about VAT, then please contact us on 01903 234094 to speak to a member of our tax team.
