Businesses who opted to defer VAT payments in 2020 can now pay their liabilities in smaller monthly instalments, it has been announced.

It comes after the launch of the VAT Deferral New Payment Scheme.

According to the latest statistics, more than half a million businesses chose to defer VAT payments in 2020 in response to the coronavirus pandemic.

The initiative – which is now closed – enabled VAT-registered businesses to defer VAT payments between 20 March and 30 June 2020 until 31 March 2021, when accumulated liabilities will be due.

But the new payment scheme will give businesses the option to pay deferred VAT liabilities in two to 11 equal consecutive monthly instalments from March, April, May, or June 2021, without adding interest.

To do so, your business must opt into the new VAT Deferral New Payment Scheme before 21 June 2021.

If you do not pay your VAT bill in full by 31 March or opt into the deferral scheme by 21 June, you may be charged interest and penalties.

Commenting on the launch of the initiative, Jesse Norman, Financial Secretary to the Treasury, said: “The government has provided a package of support worth over £280 billion during the pandemic to help protect millions of jobs and businesses.

“This now includes the VAT Deferral New Payment Scheme, which will help provide businesses with the breathing space they may need to manage their cashflows in the weeks and months ahead.”

To access the scheme, please click here.

For help and advice with related matters, please get in touch with our expert team today.