In response to COVID-19 HMRC confirmed that all payments of VAT to HMRC due between 20 March 2020 and 30 June 2020 could be deferred until 31 March 2021, to help businesses manage their cash flow.

It was announced in the Winter Economy Plan that the Government would give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. Rather than paying in full at the end of March 2021 (as originally planned), businesses would be able to choose to make payment in instalments over 2021-22.

HMRC has confirmed that you may be charged a 5% penalty or interest if you do not pay in full or make an arrangement to pay by 30 June 2021.

HMRC has now published updated guidance with instructions on how to repay deferred VAT.