Deferred VAT – How to avoid a late payment penalty


You may have taken advantage of the deferred VAT scheme. If you did, you should read this note. 

Deferred VAT Penalty

If you do not pay your Deferral VAT in full or make an arrangement to pay by 30 June 2021, you may be charged a 5% penalty and interest. 

How to avoid the penalty

Basically, you need to do one of the following to avoid a penalty: 

  • Pay the full deferred VAT by 30 June 2021 
  • Join the New Deferred VAT Payment Scheme by 21 June 2021 
  • Contact HMRC to discuss other methods. 

VAT Deferral New Payment Scheme

On February 2021 HMRC announced the opportunity to join the New Online Deferral VAT Scheme to pay your deferred VAT in equal consecutive monthly instalments between March 2021 and June 2021. 

The deadline to enroll in this scheme is 21 June 2021

The new scheme allows you: 

  • pay your deferred VAT in equals instalments (zero interests) 
  • according to when you join, you can choose the number of instalments from 2 to 11. 
Join by Maximum instalments available to you 
19 March 2021 11 
21 April 2021 10 
19 May 2021 
21 June 2021 

What you need to join the new deferred VAT scheme?

To join the scheme, you need the following information: 

  • VAT registration number 
  • Your own Government Gateway account 
  • Last 4 years outstanding VAT returns to submit (required) 
  • No errors on your VAT return (or to have corrected any errors) 
  • Know the total amount deferred  
  • Know how much you have already paid 

Moreover, to join the scheme you must pay your instalments by Direct Debit, otherwise you must contact the COVID-19 help line .

Full payment by 30 June 2021

If you want to pay the full amount, then you need to do this by 30 June 2021 to avoid penalty. 

There are different methods to complete the payment. 

Online or telephone banking  Same or next day payment 
CHAPS (Clearing House of Automated Payment System) Same or next day payment 
Online bank account Same or next day payment 
Direct Debit 3 working days payment 
Bacs (Bankers Automated Clearing System) 3 working days payment 
Online debit or corporate credit card 3 working days payment 
Standing order 3 working days payment 
At your bank 3 working days payment 

In any other case, you need to contact HMRC and discuss for an extra help. 

Overview You may have taken advantage of the deferred V […]

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