In the spring of 2020, one of the measures for helping businesses to cope with Coronavirus was the ability to defer VAT which was due for payment between 20 March 2020 and 30 June (as mentioned here). This was initially deferred until 31 March 2021. HMRC subsequently brought in a further measure to help. Businesses with a deferred VAT liability could opt to spread the cost over 2 to 11 interest free payments before March 2022. This is known as the New Payment Scheme.
The New Payment Scheme has to be opted into. In order to use the scheme, there are a few conditions to meet:
- There must still be VAT to pay,
- The business must be up to date with its VAT returns,
- It must be able to pay the VAT by direct debit,
- It must be able to opt in and pay the first instalment by 31 March 2021.
In preparation for using the scheme, you should make sure that you have a Government Gateway account, if you don’t already have one. You should also clean up your VAT account, which includes submitting any outstanding VAT returns and correcting any errors. Finally, you should make sure that you know how much you owe (the amount you originally deferred and how much, if anything, you’ve already paid).
More information is available from here.
NB at the time of writing (5.1.21), it was not possible to opt into the New Payment Scheme. If this is something which you wish to do, please revisit the HMRC page regularly to check for availability.