VAT Deferral Scheme Applications

The VAT deferral scheme is open to businesses that took the option to defer the payment of their VAT liabilities between 20 March 2020 and 30 June 2020. 

The scheme allows businesses the option to pay the deferred VAT in smaller payments over a longer period, interest free. Instead of having to repay the full amount by 31 March 2021, businesses can make smaller interest-free payments during the 2021-22 financial year and pay the VAT due by 31 March 2022. 

The VAT deferral new payment scheme remains open for applications and will remain so up to and including 21 June 2021. The maximum number of instalments allowed under the scheme is based on the date businesses sign up to the scheme. The first instalment must be paid on joining the scheme. The later businesses join, the fewer instalments will be available to them. Businesses that join by 19‌‌ ‌May‌‌‌ ‌2021, can pay in up to nine monthly instalments and businesses that join by 21 June 2021 can pay in eight instalments. The online scheme will close to new applications on 21 June 2021.

Businesses must also meet certain conditions to use the scheme including being up to date with their VAT returns. HMRC has now confirmed that businesses may be charged a 5% penalty or interest if they do not pay the VAT in full, sign up to the scheme or arrange to pay by 30 June 2021.

If you have any questions on the VAT deferral scheme get in touch with your usual FC contact. Or email hello@farnellclarke.co.uk.