To support businesses during the COVID-19 crisis, VAT payments due between 20 March 2020 and 30 June 2020 were automatically deferred until 31 March 2021. However, businesses don’t have to pay the deferred balance in full by 31 March, and instead have the opportunity to spread repayments under the new payment scheme.
HMRC have now confirmed that businesses will be able to sign up for this scheme online between 23 February and 21 June 2021.
Instead of paying the full amount deferred by the end of March 2021, the scheme allows businesses to make smaller monthly instalments, interest free. Businesses can select the number of equal monthly instalments they wish to make, but all instalments must be paid by the end of March 2022.
The first instalment will be payable at the time of joining the scheme. The maximum number of instalments then available to a business will be determined by when they join the scheme - if a taxpayer signs up late in the sign up window this will reduce the number of instalments available for repayment.
More information on the new payment scheme and how to sign up can be found in our COVID-19: VAT payment deferral guidance note.