Posted: 19 / 02 / 2021

For businesses that took advantage of the opportunity to defer VAT payments for the period from 20 March to 30 June 2020, the deadline of 1 March 2021 for making repayment is fast approaching.

There is however a choice – businesses can pay all amounts owed in one go or can opt to pay the amounts owed over a maximum 11 month period interest-free. HMRC have announced that the on-line service for opting into the payment scheme will open on 23 February 2021 and opting into the scheme will be possible until 21 June 2021.

The VAT registered business that has deferred its VAT payment must opt-in – an agent cannot do this on its client’s behalf. Businesses will therefore need a government gateway account to be able to opt-in.

A condition to being able to opt-in is that all VAT returns must be up to date. If any returns are late or have otherwise not been submitted, the business will not be able to opt into paying by instalments. The first instalment must be paid on joining the scheme, with subsequent payments made by direct debit. Businesses will need to make sure they have the capacity to fund these payments. If this will be difficult, it is still possible to seek a time to pay arrangement with HMRC.

Existing time to pay arrangements can continue to run alongside the VAT payment scheme.

Instalment options…

Businesses can decide to join between 23 February and 21 June 2021. When a business opts in will determine the number of instalment payments that will need to be made:


19 March 2021 / 11
21 April 2021 / 10
19 May 2021 / 9
21 June 2021 / 8

More on your options…

Pay the deferred VAT in full, on or before 31 March ➞

Join the VAT deferral new payment scheme ➞