Businesses and the self-employed who deferred VAT payments in 2020 now have the option to either pay their deferred VAT or join the Governments new VAT deferral payment scheme.

VAT payments deferral: Helping UK businesses and the self-employed manage their cash flow

Back in March 20, the UK Government announced that certain VAT payments could be deferred. One of several measures introduced to support businesses and self-employed through the COVID-19 crisis, the deferral was available to all UK VAT registered businesses and non-established taxable individuals. It was automatically applied to payments due between 20 March 2020 and 30 June 2020.

The effected businesses and individuals were initially given until 31 March 21 to pay any liabilities due, however this was then revised in the Chancellor’s Winter Economy Plan, to give the option to either pay in full by March 2021, or make up to 11 equal instalments over 2021-22.

I have deferred VAT liability which now need to be paid – what are my options?

Those who still have VAT liabilities due can either:

  • Pay the deferred VAT in full, on or before 31 March 2021

You needn’t contact HMRC

  • Join the VAT deferral new payment scheme

The online service is open between 23 February and 21 June 2021, which you must opt into should you wish to (more information below)

  • Contact HMRC if you need extra help paying your liabilities

Contact HMRC on 0800 024 1222 by 30 June if you need extra help to pay and agree a solution

Whilst HMRC has not charged interest or penalties on any amount deferred, failure to complete one of the actions above could result in additional interest charge or a penalty moving forward.

Joining the new scheme

The VAT deferral new payment scheme will be open to join from 23 February, up to and including 21 June 2021 and lets you pay your deferred VAT in equal instalments, interest free and over a set number of instalments. The month you decide to join will determine the maximum number of instalments available, as outlined below:

Date you join the scheme Maximum number of possible instalments
19 March 2021 11
21 April 2021 10
19 May 2021 9
21 June 2021 8

It is important to note that you must join the scheme yourself – your agent cannot do this for you. For more information on how to join the VAT deferral new payment scheme, click here.

Our VAT team are here to help you

If you need more advice on which options might better suit your individual circumstances, or have any other VAT queries, please do not hesitate to get in touch with our dedicated team of VAT advisors. We are here to help you manage your VAT responsibilities in the best possible way with minimum fuss.