On 20th March 2020 the Chancellor announced a temporary deferral of VAT payments for all UK businesses. At the time you didn’t have to sign up to be deferred, you simply didn’t have to pay until March 2021. As we are now approaching this deadline HMRC have published guidance on how and when to pay including the option of paying by instalments.

If you deferred VAT payments due between 20th March and 30th June 2020 and still have payments to make your options are:

pay the deferred VAT in full, on or before 31st March 2021
Join the VAT deferral new payment scheme - the online service is open between 23rd February and 21st June 2021
contact HMRC on 0800 024 1222 by 30th June if you need extra help to pay

You may be charged interest or a penalty if you don’t pay the deferred VAT amount in full by 31st March 2021 or opt into the new payment scheme by 21st June 2021.

The VAT deferral period covered accounting periods:

February 2020
March 2020
April 2020
May 2020 - for payment on account customers and certain non-standard tax periods only, in addition to the above periods.

If you want to join the new scheme, you will be able to do so from 23rd February up to and including 21st June 2021. If you are on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you will be invited to join the new payment scheme later in March 2021.

To use the online service to sign up to the new payment scheme you must join the scheme yourself, agents cannot do this for you. You will have to pay the first installment when you join and you must be up to date with all other subsequent returns.

Instalment options available to you will be determined on when you join the scheme (the maximum number of instalments below includes the first payment that you will make when you join the scheme):

If you join by 19th March 2021 - Number of Instalments available to you will be 11

If you join by 21st April 2021 - Number of Instalments available to you will be 10

If you join by 19th May 2021 - Number of Instalments available to you will be 9

If you join by 21st June 2021 - Number of Instalments available to you will be 8

Before you join the scheme you will need to:

create your own Government Gateway account if you don’t already have one.
submit any outstanding VAT returns from the last 4 years - otherwise you will not be able to join the scheme
correct errors on your VAT returns as soon as possible
make sure you know how you much you owe, including the amount you originally deferred and how much you may have already paid.

You will not be able to use the online service if:

you do not have a UK bank account
cannot pay by Direct Debit
have dual signatories on your account

The full guidance from HMRC can be read here

Information correct at the time of writing. Source: gov.uk

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