VAT Deferment

February 26, 2020by Sam Hosegood

If you deferred VAT between 20 March and 30 June 2020 and still have payments to make, you can either:

  • pay the deferred VAT in full on or before 31 March 2021
  • opt in to the VAT deferral new payment scheme when it launches in 2021
  • contact HMRC if you need more help to pay

Opting into the new payment scheme

The payment scheme is now open and is due to close at the end of June 2021. If you choose to opts in, you can make up to 11 smaller monthly instalments, interest free.

You can opt in to the scheme online without the need to call. Go to VAT deferral for more information,  you can opt in quickly and simply online when the scheme opens.

If you can pay their deferred VAT by 31 March 2021 then you should do so.

All instalments must be paid by the end of March 2022.

To use this scheme you must:

  • still have deferred VAT to pay
  • be up to date with your VAT returns
  • opt in before the end of March 2021
  • pay the first instalment when you opt in

If you opt in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.

Get ready to opt in to the new payment scheme

Before opting in you must:

  • create your own Government Gateway account if you don’t already have one
  • submit any outstanding VAT returns from the last 4 years. You will not be able to join the scheme if you have not done so
  • 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

You should also:

  • pay what you can as soon as possible to allow us to show the correct deferred VAT balance
  • consider the number of equal instalments you’ll need, from 2 to 11 months

Correcting errors on your VAT returns relating to the VAT payments deferral scheme

The VAT payments deferral scheme covered accounting periods for:

  • February 2020
  • March 2020
  • April 2020
  • May 2020 – for customers using Payment on Account or with Non-Standard Tax Periods (NSTP)

If you notice an error on a VAT return which relates to a period covered by the scheme, you should:

  1. fill in form VAT652
  2. send it to the VAT Error Correction Team

Deferring extra payments resulting from error corrections

You can contact our COVID-19 helpline to ask us to include extra error correction payments in your deferred VAT balance after (both of the following):

  • HMRC have processed your error correction
  • you have received a Statement of Account confirming the balance

You can then:

You may also be contacted by HMRC if we’ve carried out a VAT assessment and found that extra payments are due for the deferral period. You must also contact our COVID-19 helpline if you want to defer these payments.

If you are not able to pay your deferred VAT

If you are still unable to pay and need more time, find out what to do if you cannot pay your tax bill on time.

Business owners have to opt into this scheme themselves so unfortunately we cannot do it for you but we can guide you through the process if you’d like us to so please get in touch if we can help.