Pay VAT deferred due to coronavirus (COVID-19)

HMRC have issued new guidance on how to pay VAT payments deferred between 20 March and 30 June 2020. Businesses can pay prior to 31 March or opt into the VAT deferral new payment scheme.

The online opt in process will be available in early 2021. A business must opt in, an agent cannot do this. Instead of paying the full amount by the end of March 2021, up to 11 smaller monthly instalments can be made, interest free. All instalments must be paid by the end of March 2022.

To use this scheme businesses must:

• still have deferred VAT to pay;
• be up to date with their VAT returns; and
• be able to pay the deferred VAT by Direct Debit.

Even if a business opts in to the scheme, they can still have a time to pay arrangement for other HMRC debts and outstanding tax.

Before opting in businesses must create their own Government Gateway account if they don’t already have one and submit any outstanding VAT returns from the last four years. They will not be able to join the scheme if they have not done so.

Businesses should also pay what they can as soon as possible to allow HMRC to show the correct deferred VAT balance and consider the number of equal instalments they will need, from 2 to 11 months.