When the Covid-19 pandemic first started and sent the United Kingdom into lockdown, the government announced a 3-month deferral of all VAT payments for the first quarter of 2020.

But these deferred VAT payments are now due. There are two options for payment. Companies can either pay the deferred payment in full or join the new VAT deferral payment scheme.

Alongside this HMRC has confirmed that the penalty or interest rate for deferred company VAT payments has been set at 5%. Companies that deferred VAT payments from March to June 2020 will be subject to this penalty interest rate. The online VAT deferral notification service opened on February 23rd 2021 and will be available until June 21st 2021.

The objective of this scheme is to give businesses the option to pay in instalments by direct debit every month. Rather than one lump sum. You can choose between 2 and 11 equal sums, depending on when you join the scheme. If you join by April 21st 2021 it will be 10 instalments. If you join by May 19th 2021 there are 9 instalments. And June 21st 2021 will be 8 instalments.

You cannot include extra payments after you’ve joined the scheme. Any error correction relating to the deferral period that is notified to HMRC after 31 March 2021, cannot be deferred and interest will apply.

If you need further guidance contact The Financial Management Centre today. And to join the HMRC scheme click here.

Kass Verjee
Kass Verjee

Kass is not only a qualified bookkeeper/accountant but he is also a Fellow of The Institute of Chartered Accountants in England and Wales and has a full practising certificate.