COVID 19- Deferral of Vat payments

Update: 09 February 2021

VAT deferral new payment scheme – Join from 23‌‌ February 2021

As per the original VAT deferral scheme (read below), if you deferred paying VAT (due from 20‌‌ March to 30‌‌ June‌‌ 2020), it must be paid by 31‌‌ ‌March‌‌ ‌2021.

However, under the new scheme, if you can’t afford to pay by 31‌‌ March‌‌ 2021, you can now join the VAT deferral new payment scheme. Which means you can now pay your deferred VAT over a more extended period. Here are the main features of this scheme:

Hire VAT Accountants

Work with a UK-based accountant for tax, accounting, payroll, & EIS/ SEIS needs.

Have a question? Call us on
0203 900 3500
Monday to Friday 9am – 5pm
  1. Everything is online. So no need to call HMRC.
  2. Service will open on 23‌‌ February‌‌ 2021.
  3. It will close on 21‌‌ June‌‌ 2021.
  4. You can now pay deferred VAT in 11 monthly instalments, interest-free.
  5. You must register by 19 March 2021 to avail all 11 instalments.
  6. The sooner you join, the more months you will have to spread the payments across.
  7. What is required to set up online payments:
  • Government gateway account   
  • All outstanding VAT returns are submitted
  • You know how much you owe
  • UK bank account
  • Direct debit
  • Have one signatory on the bank account

26 March 2020

Temporary changes to the VAT payments due between 20 March 2020 and 30 June 2020 to help businesses manage their cash flow.

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

  • defer the payment until a later date
  • pay the VAT due as normal

HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.

VAT payments you can defer

You can only defer:

  • quarterly and monthly VAT returns’ payments for the periods ending in February, March and April
  • payments on account due between 20 March 2020 and 30 June 2020
  • annual accounting advance payments due between 20 March 2020 and 30 June 2020

The deferral does not cover payments for VAT MOSS or import VAT.

VAT repayments and returns

HMRC will continue to process VAT reclaims and refunds as normal and most repayments are paid within 5 working days.

Repayments will not be offset against any deferred VAT, but they will be offset against existing debts.

You can apply online to move to monthly returns to improve your cashflow if you’re in a repayment position.

How deferring VAT affects payments on account

If you defer a payment on account between 20 March 2020 and 30 June 2020 but the balancing payment is outside of these dates, the amount you must pay is the balancing payment less any deferred payments. Deferring payments will not create a repayment.

NOTE:

If you choose to defer paying your VAT:

If you choose to defer your VAT payment as a result of coronavirus, you must pay the VAT due on or before 31 March 2021.

Note:

  • You do not need to tell HMRC that you’re deferring your VAT payment.
  •  Cancel your Direct Debit through your bank as soon as possible so that HMRC will not automatically collect any VAT due.

After the VAT deferral ends

VAT payments that are due after the end of the deferral period will need to be paid as normal.

Hire VAT Accountants

Work with a UK-based accountant for tax, accounting, payroll, & EIS/ SEIS needs.

Have a question? Call us on
0203 900 3500
Monday to Friday 9am – 5pm

How to get help

Time to pay arrangements are available to all businesses and individuals who are in temporary financial distress as a result of coronavirus. Time to pay arrangements that started before 20 March 2020 should still be paid.

If you’re struggling to pay your tax bill on time, or you’re experiencing financial difficulties you can contact HMRC’s Time to Pay service.

You can also contact us  or the HMRC coronavirus helpline for help and advice.