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Guidance

VAT deferred due to coronavirus (COVID-19)

Find out about VAT payments deferred between 20 March and 30 June 2020.

Updates to this page

From:
HM Revenue & Customs
Published:
26 March 2020
Last updated:
16 September 2023
Show all updates

  1. The guidance has been updated, as the COVID-19 helpline for businesses and self-employed is now closed.

  2. Information about the VAT deferral penalty has been added.

  3. Information added to advise the VAT deferral new payment scheme has now closed.

  4. Information about paying your deferred VAT in full or to make an arrangement to pay by 30 June 2021 has been added.

  5. Information about paying your deferred VAT in full or to make an arrangement to pay by 30 June 2021 has been added.

  6. Information has been added on penalties or interest that may be charged if you do not pay in full or make an arrangement to pay and how you may still be able to avoid these charges.

  7. Information about the maximum number of instalments that are available to you has been updated.

  8. This page was updated on 4 March 2021. If you’re on the VAT Annual Accounting Scheme or the VAT Payment on Account Scheme, you can join the scheme from 10 March 2021.

  9. The VAT deferral new payment scheme is now open. A link has been added to join the scheme.

  10. Information added about how to join the VAT deferral new payment scheme – the online service is open between 23 February and 21 June 2021.

  11. Added new section on 'Correcting errors on your VAT returns relating to the VAT payments deferral scheme'. Including information on how to defer any extra payments resulting error corrections and HMRC VAT assessments.

  12. Added translation

  13. Added translation

  14. Opt in to the the new payment scheme by the end of March 2021

  15. Added translation

  16. New payment scheme will be available in 2021. Guide updated with information on how to opt in to the scheme.

  17. Announcement by the Chancellor on 24 September 2020 about the option to pay smaller VAT payments over a longer period of time has been added to the page.

  18. Information about the VAT payments deferral scheme ending on 30 June 2020 has been added.

  19. Information regarding the ending of the VAT deferral period added

  20. Added translation

  21. HMRC's digital assistant link has been added to the 'get help' section.

  22. Updated details about how which VAT payments can be deferred including payments on account and monthly and quarterly payments.

  23. Welsh translation added.

  24. Information about deferring VAT payments because of coronavirus (COVID-19) has been updated to clarify that import VAT payments are not included.

  25. First published.

The VAT deferral new payment scheme has now closed.

Businesses that deferred VAT payments due between 20 March 2020 and 30 June 2020 were able to either:

  • pay in full by 31 March 2021
  • join the online VAT deferral new payment scheme by 21 June 2021 to spread payments of deferred VAT over smaller, interest free instalments
  • contact HMRC to make an arrangement to pay by 30 June 2021

You may be charged a 5% penalty or interest if you did not pay in full or make an arrangement to pay by 30 June 2021.

How to pay your VAT bill

Find out what to do to pay your VAT bill.

Any deferred VAT outstanding after 30 June 2021 will be treated as debt and may be subject to a penalty.

If you are unable to pay and need more time, find out what to do if you cannot pay your tax bill on time.

To find what other support is available, use the Get help and support for your business guide.

Penalty for non-payment of VAT

A financial penalty may be charged if you did not take any action to pay your deferred VAT in full, or make an arrangement to pay by the deadline of 30 June 2021.

The legislative framework for the penalty is contained in the Finance Act 2021 section 99 and schedule 19.

How the penalty works

If you did not pay your deferred VAT in full or made an arrangement to pay by 30 June 2021 you must pay a penalty, this is calculated on the amount of unpaid deferred VAT.

Making an arrangement to pay included either:

  • joining the VAT deferral new payment scheme
  • contacting HMRC to agree extra help to pay

How the penalty is calculated

The penalty is charged at 5% of the deferred VAT that’s unpaid when the penalty is assessed.

When to pay your penalty

You must pay the penalty within 30 days of the date of the penalty assessment.

How to appeal against a penalty

Reasonable excuse

You can appeal against a penalty if you have a reasonable excuse.

Statutory review

You can have your tax decision reviewed by someone at HMRC who was not involved in the original decision. This is known as a ‘statutory review’.

The penalty decision could either be:

  • upheld
  • changed
  • cancelled

Further information is available on how to:

First-Tier Tribunal (Tax)

You can also appeal against the decision to the First-tier Tribunal (Tax).

General enquiries

If you need general help about VAT you can contact VAT: general enquiries.

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