How to submit a deferred VAT payment

On 20 March 2020, the Government announced that VAT payments could be deferred between that date and 30 June 2020, as part of measures to support businesses through the coronavirus pandemic. This deferment option was available to all VAT-registered businesses in the UK and was automatic, meaning it was not necessary to apply to HMRC. 

Initially, it was expected that businesses would submit deferred VAT payments in full by 31 March 2021, but the Government later gave the option of making up to eleven monthly instalments, to be paid by the end of March 2022, which will remain interest-free. At MCC Accountants, we want to take you through how to pay deferred VAT on time, so that you have one less thing to worry about this year.

Making your payment

The most straightforward option is to pay your deferred VAT in full by 31 March 2021. If you choose to do this, you do not need to contact HMRC.

Alternatively, you will need to opt in to the new payment scheme. The online opt-in process is not yet open, however, the Government says it will open early in 2021, so it shouldn’t be much longer. When it does, it is required that you register before the end of March 2021, and your agent cannot do this for you. You will need to pay the first instalment as soon as you do so. Registering for the new payment scheme does not affect any time-to-pay arrangements for other HMRC debts and outstanding tax. 

There are several things you must do before you join the scheme:

  • Ensure you have submitted your VAT returns from the past four years
  • Know how much you originally deferred, and account for any amount you may have already paid
  • Create a Government Gateway account, unless you already have one
  • Check your VAT returns for errors, as explained below

Correcting errors on VAT returns

If there are any mistakes on your VAT returns over the accounting period covered by the deferral scheme (February, March and April 2020, including May 2020 for customers using Payment on Account or with Non-Standard Tax Periods (NSTP)), they will need to be rectified quickly. If you notice any, you should fill in form VAT652 and send it to the VAT Error Correction Team at [email protected]

To ask for extra payments resulting from error correction to be included in your deferred VAT balance, you can contact the Government Covid-19 business helpline. Before you do this, ensure HMRC have processed the correction and you have received a Statement of Account confirming your balance. However, it’s important to note that the deadline for including these payments in the new payment scheme passed on 29 January 2021, therefore they must be paid in full by 31 March 2021.

If you are still unable to submit your deferred VAT payment and require further help, it is worth contacting HMRC directly about this. 

How we can help

If you need help to submit a VAT payment or have any other tax-related queries, then Salford-based MCC Accountants will be happy to assist. Please call us on 0161 707 1500 or use the details on our contact page.