Up to half a million businesses who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments. Rather than paying a lump sum in full at the end of March 2021, they will be able to make 11 smaller interest-free payments during the 2021/22 financial year.
On 24 September 2020, the Chancellor announced that businesses who deferred VAT due from 20 March to 30 June 2020 now have the option to pay in smaller payments over a longer period.
If you deferred VAT payments due between 20 March and 30 June 2020 and still have payments to make, you can:
pay the deferred VAT in full, on or before 31 March 2021
join the VAT deferral new payment scheme – the online service is open between 23 February and 21 June 2021
contact HMRC on the phone: 0800 024 1222 by 30 June 2021 if you need extra help to pay
The VAT deferral payment scheme opens on the 23rd Feb
For those who do choose to opt in, this means that your VAT liabilities due between 20 March and 30 June 2020 do not need to be paid in full until the end of March 2022.
Those that can pay their deferred VAT can still do so by 31 March 2021.
If you are still unable to pay the VAT due and need more time, see the guidance about what to do if you cannot pay your tax bill on time.
What you need to do
If you have cancelled your Direct Debit to HMRC to take advantage of the deferral, you will need to set up a new Direct Debit arrangement in time for the first payment after 30 June.
Payments due after 30 June must be paid in full as normal and you must continue to file your VAT return on time.
Paying the tax that you have deferred
If you chose to defer your VAT payment as a result of coronavirus, you must pay the VAT on or before 31 March 2021.
You can pay or make payments towards your deferred VAT now or at any time up to 31 March 2021.
Please get in touch with us if you need assistance in managing your accounting during this time.