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UK COVID new HMRC deferred VAT repayment scheme

  • Feb 12, 2021 | Richard Asquith

The UK’s HMRC has issued a new scheme for repaying VAT that taxpayers deferred between 30 March and 20 June 2020. This VAT was scheduled to fall due after 31 March 2021, and HMRC has now launched a new 2021 repayment scheme.

The 2020 deferrment measure was offered to support businesses during the first wave of the coronavirus pandemic. This was provided to 2 million taxpayers who rolled over around £34billion in VAT.

There are now two repayment options for taxpayers who deferred their VAT in 2020. Failure to choose either will result in interest and late penalties:

  1. Pay the VAT by 31 March 2021; or
  2. Join a new deferral scheme open between 23 February and 21 June 2021

New HMRC deferred payment scheme:

The new scheme lets taxpayers:

  • pay the deferred VAT in equal instalments, interest free
  • choose the number of instalments, from 2 to 11 (depending on when the taxpayer joins)

To apply for the scheme taxpayers must:

  • join the scheme; agents cannot do this
  • still have deferred 2020 VAT due
  • be up to date with their VAT returns
  • join by 21 June 2021
  • pay the first instalment when they join
  • pay instalments by Direct Debit - contact HMRC for alternatives.

If taxpayerrs join the scheme, they can still have a Time to Pay arrangement for other HMRC debts and outstanding tax.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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