As part of the Government’s response to COVID-19 HMRC allowed businesses to defer until 31st March 2021 the VAT payment due between 20th March 2020 to 20th June 2020. However, should a business be unable to make the payment before 31st March 2021, HMRC would allow them to pay in instalments. The portal to set up the instalments has opened today.
To use the Payment Scheme you must:
- join the scheme yourself – we, as your accountant, cannot do this for you
- still have deferred VAT to pay
- be up to date with your VAT returns
- join by 21st June 2021
- pay the first instalment when you join
- pay your instalments by Direct Debit
The instalments will be in equal amounts. The month you decide to join the Scheme will determine the maximum number of instalments that are available to you. If you join the Scheme in March, you will be able to pay your deferred VAT in 11 instalments or fewer. Below we set out the monthly joining deadlines, to allow for Direct Debit processing, and the corresponding number of maximum instalments available to you (including the first payment):
Join by 19th March 2021 – 11 instalments
Join by 21st April 2021 – 10 instalments
Join by 19th May 2021 – 9 instalments
Join by 21st June 2021 – 8 instalments
21st June 2021 is the absolute deadline for joining the Scheme. After this date, you will be charged interest and a penalty on any outstanding VAT amounts.
To find out more and to join the Scheme click here.