Extension to March 2022 for COVID-19 VAT payment deferral scheme

Many organisations have taken advantage of the COVID-19 VAT payment deferral scheme which allowed them to defer VAT payments falling due between 20 March 2020 and 30 June 2020 until 31 March 2021. HMRC has recently issued guidance on the process of extending the deferral by a year to the end of March 2022.

If an organisation has deferred VAT between 20 March 2020 and 30 June 2020 and still has payments to make, it has three options:

• pay the deferred VAT in full on or before 31 March 2021
• opt in to the VAT deferral new payment scheme when it launches in 2021
• contact HMRC for more help to pay.

Opt in to the VAT deferral new payment scheme

Instead of paying the full amount by the end of March 2021, up to 11 smaller monthly instalments can be made, interest free. All instalments must be paid by the end of March 2022.

The scheme will allow organisations to:

• pay deferred VAT in instalments without adding interest
• select the number of instalments from 2 to 11 equal monthly payments.

To use this scheme, organisations must:

• still have deferred VAT to pay
• be up to date with VAT return declarations
• be able to pay the deferred VAT by Direct Debit.

How to opt in

Before opting in organisations must:

• create a Government Gateway account
• submit any outstanding VAT returns from the last four years.
• correct any errors on submitted VAT returns as soon as possible. Corrections received after 31 December 2020 may not show in the deferred VAT balance
• make sure the amount owed is known, including the amount originally deferred and how much has already been paid.

If organisations have difficulties in making these VAT payments, they should be able to agree a ’time to pay’ arrangement with HMRC. Crowe’s VAT and Custom’s Duty team can support you in applying for this.