To help businesses cope with the financial impact of the first national lockdown, VAT-registered businesses were able to defer payments of VAT that fell due between 20 March 2020 and 30 June 2020. Businesses that were unable to pay their deferred VAT in full by 31 March 2021 can take advantage of the online VAT deferral new payment scheme to spread the cost and pay what they owe in interest-free instalments. The number of instalments available depends on when the business signs up to the scheme – payment is made in:
- 11 instalments where the business signed up by 19 March 2021;
- ten instalments where the business signed up between 20 March 2021 and 21 April 2021;
- nine instalment where the business signed up between 22 April 2021 and 19 May 2021; and
- eight instalments where the business signed up between 20 May 2021 and 21 June 2021.
The earlier the business signs up, the greater the number of instalments over which the deferred VAT can be spread (and the smaller each instalment).
The online scheme closes on 21 June 2021, and business that wish to pay their deferred VAT in instalments must join the scheme by that date. However, if the business already has a time-to-pay arrangement in place for their deferred VAT, they cannot use the online scheme. They should contact HMRC if they wish to amend their time-to-pay arrangement.
Business that have not joined the online scheme by 21 June 2021, agreed a time-to-pay arrangement or paid their deferred VAT in full by 30 June 2021 may be charged a 5% penalty.