In November last year HMRC announced that a new payment scheme would be set up in 2021 to pay the VAT deferred from the period 20 March to 30 June 2020. Today HMRC has clarified the payment options and how to join the VAT deferral new payment scheme. The online service will be open between 23 February and 21 June 2021.
The payment options are:
- Pay the deferred VAT in full, on or before 31 March 2021
- Join the VAT deferral new payment scheme between 23 February and 21 June 2021
- Contact HMRC 0800 024 1222 by 30 June if you need extra help to pay
Interest or penalties may apply if you do not take one of these options.
To join the VAT deferral new payment scheme, which allows payment of deferred VAT in equal instalments, you must join the scheme yourself. Agents cannot do this for you. The earlier you join the scheme, the greater the number of instalments available – 11 in March falling to 8 in June.
You must join by the 21 June and pay the first instalment on joining, ideally by Direct Debit. You will require a government gateway account and have no outstanding VAT returns for the past 4 years.
Please note if you are on the VAT Annual Accounting Scheme or VAT Payment on Account Scheme, HMRC advises that you will be invited to join the new payment scheme later in March 2021.
Wayne Thomas, partner at Bates Weston comments:
“The VAT deferral new payment scheme will be a welcome measure to reduce the pressure on cash flow that many businesses are feeling. The end of March was going to be a pinch point for many as the deferred VAT payment and first repayments on government support loans would have fallen due. Recent announcements regarding delaying Bounce Back Loan repayments and the details on this scheme, should alleviate some of the pressure. Still of major concern for many will be the end of the CJRS in April. The Chancellor does seem to be listening to the concerns raised by business, and we may yet have further announcements before or during the Budget on 3 March.”
If you would like our help in managing your own cashflow position, please do get in touch.