What is the VAT deferral new payment scheme?

VAT Deferral New Payment Scheme

Estimated reading time: 3 minutes

Due to pay your deferred VAT payment? How to opt in to the new VAT deferral payment scheme and pay monthly instalments?

Many businesses deferred their VAT payment for the periods between March and June 2020. This was one of the many Covid support packages offered by HMRC. Unfortunately the deferment is due to end.

We go through the options on how to pay the deferred VAT payment and what needs to be done to set up an instalment plan.

Pay the deferred VAT liability by 31st March 2021?


If you want to pay the VAT liability in full you can do so without having to contact HMRC.

To make the payment of your deferred VAT go to HMRC – pay VAT

How to pay the deferred VAT liability in monthly instalments?


Instead of paying the full VAT liability (above option), businesses can now choose to repay in monthly instalments.

The payments can be from 2 up to 11 monthly instalments, with all repayments made by March 2022.

The new payment scheme is interest free.

Who qualifies for the monthly instalment VAT payment scheme?


To qualify for the instalment payment scheme you must:

1. Have deferred your VAT liability and still have an amount to pay,
2. All VAT returns must be filed and up to date,
3. Opt in to the scheme before 21 June 2021,
4. Make the 1st instalment when you opt into the scheme.

What deferred VAT instalments are available?


Depending on when you opt into the scheme will determine your options available.

A. Join by 19th March 2021 and you will have up to 11 monthly instalments available,
B. Join by 21st April 2021 and you will have up to 10 monthly instalments available,
C. Join by 19th May 2021 and you will have up to 9 monthly instalments available,
D. Join by 21st June 2021 and you will have up to 8 monthly instalments available.

How do I set up a monthly VAT instalment payment plan?


Go to the HMRC VAT deferred instalment webpage. Then scroll down to where is says ‘Join the Scheme now’.

How to be ready for the VAT payment scheme?


Before applying for the scheme, there are some things that businesses can do now to ensure a smooth process.

Firstly, the opt in scheme will be through your Government Gateway. Therefore, if you don’t have an account already you must set one up. Here is a link to set up a HMRC Tax Account

NOTE: HMRC have confirmed that agents won’t be able to apply on behalf of their clients. As a result many businesses will need to set themselves up with their own Tax Account.

Secondly, ensure that any outstanding VAT returns are submitted. The scheme will not be available if any returns are outstanding.

Further Information – VAT Deferral Payment Scheme

HMRC Link on the deferral of VAT payments
Our blog on what is the VAT deferral scheme

DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer

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