Paying back deferred VAT due to Coronavirus

As a result of Coronavirus HMRC gave the opportunity defer VAT due in the following accounting periods:

  • February 2020
  • March 2020
  • April 2020
  • May 2020 (for payment on account customers and certain non-standard tax periods only)

If you had deferred your VAT and still have payments to make, you can either pay the deferred VAT in full by the deadline date of 31st March 2021, join the VAT deferral new payment scheme which opens on 23 February or if you need extra help to pay, you can call HMRC on 0800 024 1222 by 30th June 2021. You may be charged a penalty or interest if you do not do the previous mentioned.

If you pay your deferred VAT by 31st March 2021 you do not have to contact HMRC.

VAT Deferral New Payment Scheme

The VAT deferral new payment scheme will be open from 23rd February 2021 up to and including 21st June 2021. If you are already on the VAT Annual Accounting scheme or the VAT Payment on Account Scheme then you will be automatically invited to join the new payment scheme later in March 2021.

By joining the new scheme you can pay your deferred VAT in equal instalments between 2 to 11 instalments, depending on when you join. The repayments are interest free.

Before you join the scheme you must have a Government Gateway account. If you do not yet have one, this can be created. All VAT returns from the last 4 years must have been submitted or you will not be able to join the scheme and any errors on these VAT returns must be corrected.

You must join the scheme yourself as your agent cannot do this for you and you can only join this scheme if you still have deferred VAT to pay. The cut off date for joining this scheme is 21st June 2021 and you must pay the first instalment when you join. You can still join the
scheme if you have Time to Pay arrangements for other HMRC taxes.

Depending on when you join, the number of instalments available to you changes. Below are the number of instalments available based on your join by date:

  • 19 March 2021 – 11 Instalments
  • 21 April 2021 – 10 Instalments
  • 19 May 2021 – 9 Instalments
  • 21 June 2021 – 8 Instalments

If you are not able to use the schemes online service then you must contact the COVID-19 helpline when the scheme opens on 0800 024 1222.

If you have error corrections and what to defer extra payments because of this, you should contact the helpline as well. HMRC must have processed your error correction and you must have received a statement of account confirming the balance. After this has been done you can either include the additional payments on your fil payment by 31st March 2021 or include the new payments in the payment scheme when it opens. If you had already joined the scheme before the error corrections were made and you have additional payments to make, you cannot include these in the scheme. You may be contacted by HMRC if they have found extra payments due for the deferral period during a compliance check. You must call the helpline if you want to defer these payments.