VAT Deferral

HMRC is advising taxpayers who deferred their VAT payments to:

  • pay the deferred VAT in full on or before 31st March 2021,
  • or opt into the VAT deferral new payment scheme when it launches in 2021,
  • or to contact HMRC if they need more help to pay.

Taxpayers can pay their deferred VAT in full by 31st March 2021 and there is no need to contact HMRC.

However, if taxpayers want to use the new payment scheme, they will need to opt in. The new online opt in process will be available in early 2021. Taxpayers will need to opt in themselves as this cannot be carried out by tax agents.

Taxpayers who opt into the VAT deferral new payment scheme instead of paying the full amount by the end of March 2021, they can make 11 smaller monthly instalments. These instalments are interest free, and all instalments of the outstanding amount must be paid by the end of March 2022.

In order for taxpayers to use the scheme they must still have deferred VAT to pay, be up to date with VAT returns and opt in before 31st March 2021. Also, they must pay the first instalment by 31st March 2021 and be able to pay the deferred VAT by Direct Debit.

Taxpayers must prepare to opt in by:

  • creating their own Government Gateway account if they do not already have one
  • submitting any outstanding VAT returns from the last four years. You will not be able to join the scheme if you have not done so
  • correcting errors on their VAT returns as soon as possible. Corrections received after 31st December 2020 may not show in their deferred VAT balance
  • ensuring they know how much they owe, including the amount they originally deferred and how much they may have already paid.

Samantha Bennett of Harvey, Telford & Bates comments on the VAT deferral:

“The VAT deferral had been able to provide some financial support to taxpayers in light of the difficult situation. However, following the deadlines set by HMRC and the guidance issued there are several options available to taxpayers, which we understand can be daunting to navigate through. If you would like to talk to us at Harvey, Telford & Bates about the best option for you or simply for guidance on VAT deferral, please get in touch with our expert team.”

For more information, help and advice, please call us on 01743 462604, or email [email protected].

To find out more about the VAT deferral guidance, please visit the website here