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Covid 19 - VAT deferred due to coronavirus

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.

If you have made an arrangement to pay and need to discuss this with us, call the Coronavirus (COVID-19) helpline.

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:

  • get a review of a tax or penalty decision

  • authorise an accountant or adviser to act on your behalf

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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