For businesses that took advantage of the opportunity to defer VAT payments for the period from 20 March to 30 June 2020, the deadline for making the repayment is 31st March 2021. Alternatively, they can opt in to the newly announced HMRC payment scheme and pay the amount owed over a maximum 11 month period interest free.

To Opt in to the HMRC Payment Scheme

A VAT registered business that has deferred its VAT payment must opt in – an agent cannot do this on a client’s behalf. Businesses will need a Government Gateway account to be able to opt in.

A condition to being able to opt in is that all VAT returns must be up to date. If any returns are late or have otherwise not been submitted, the business will not be able to opt in to paying by instalments.

The first instalment must be paid on joining the scheme, with subsequent payments made by direct debit. The business will need to make sure they have the capacity to fund these payments. If this will be difficult, it is still possible to seek a time to pay arrangement with HMRC. Existing time to pay arrangements can continue to run alongside the VAT payment scheme.

The on-line service for opting into the payment scheme is now open and businesses can opt into the scheme until 21 June 2021.

Instalment options

Businesses can join until 21 June 2021 and when it opts in will determine the number of instalment payments that will need to be made.

Opt In ByInstalment Payments
19 March 202111
21 April 202110
19 May 20219
21 June 20218

For more information contact Stephen McConnell, Business Services Partner stephenmcconnell@bakertillymm.co.uk Tel: 028 9032 3466.