Further VAT deferral

At the start of the COVID-19 outbreak, many business owners decided to defer their VAT liabilities which would ordinarily have been due for payment between 20 March and 30 June 2020.

Originally the deferred VAT liabilities were due to be paid by 31 March 2021. However, H.M. Revenue and Customs (HMRC) have now released details of a further VAT deferral scheme which may well be a welcome relief for many small business owners.

What is the new VAT deferral payment scheme?

The new payment scheme, which formally opened on 23 February 2021, requires those taxpayers who wish to further defer their VAT to opt into the new payment scheme. By doing this, the taxpayer can elect to pay the deferred VAT in equal monthly instalments by direct debit over a period of up to 11 months.

If you wish to pay over 11 monthly instalments you must manually opt into the scheme by 19 March 2021. It is worth highlighting that the first payment will be at the point of opting in.

Key “opt in” dates to remember

The period to opt into this scheme officially closes on 21 June 2021 but the later that you opt in, the fewer monthly instalments you will find available. The key “opt in” dates are as follows:

Date                                   Maximum number of instalments available

21 April 2021                      10

19 May 2021                       9

21 June 2021                       8

If no opt in is made by 21 June 2021, and the deferred VAT is not paid by the end of March, businesses will face interest and penalties.

Paying your deferred VAT

To avoid penalties and interest a business must either:

  • Pay all deferred VAT before the end of March 2021, or
  • Opt into the new scheme by the deadlines, or
  • Contact HMRC to agree some other arrangement.

Businesses must meet some requirements to opt in, including filing all returns due for the past four years.

Unfortunately, we as “Agents” are not allowed to opt in on this scheme on our clients’ behalf even where we file the VAT Returns. You will need to do this yourselves and will therefore need to be able to access the Government Gateway account.

If you need any help with this scheme or finding your Government Gateway account, please do get in touch with your usual contact at Whitley Stimpson.

HMRC launches VAT deferral new payment scheme