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Businesses that deferred their VAT payments that 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 can now read additional information about the VAT deferral penalty and find out what you might owe. Businesses could receive a 5% penalty or interest if they did not pay in full or make an arrangement to pay HMRC by 30 June 2021, for instance.

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 HMRC, call the Coronavirus (COVID-19) helpline.

How the penalty works

You must pay a penalty if you did not pay your deferred VAT in full or made an arrangement to pay by 30 June 2021. HMRC will calculate the penalty based on the amount of unpaid deferred VAT. After that, you must pay the penalty within 30 days.

See: VAT deferred due to coronavirus (COVID-19) – GOV.UK (