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Background

UK VAT registered businesses who had a VAT payment due between 20 March 2020 and 30 June 2020 were allowed to defer the payment until a later date, without paying any interest or penalties. Subsequent VAT payments due after that period were due as normal, but businesses have until 31 March 2021 to pay the deferred amount without incurring interest or penalties.

Repayment options

HMRC have announced a new VAT deferral payment scheme to help businesses repay the deferred VAT. Under the scheme, you can choose to pay your deferred VAT in equal instalments, interest free. You can choose the number of instalments that suits you, from 2 to 11, although the later you join the scheme, the fewer the number of instalments allowed.

If you meet the criteria specified by HMRC, which includes being up to date with your VAT Returns, you can join the scheme online between 23 February 2021 and 21 June 2021. 

This means to avoid interest or penalties, you have the following options:

• Pay the deferred VAT amount in full on or before 31 March 2021.
• Join the new VAT deferal scheme by 21 June 2021.
• Contact HMRC by 30 June 2021 if you need extra help to pay.

Find out more >

Recording your repayments in Sage 50 Accounts

You can record your deferred VAT repayment as a bank payment to your VAT liability nominal code. 

TIP: As you're paying a number of equal instalments, to save time you can set up a recurring entry. Read more >

1. In Sage 50 Accounts click Bank accounts, click the relevant bank account then click Bank payment.
2. Enter the payment details as follows:
   

   Bank	Date	N/C	Details	Net	T/C	Tax
   Your bank account	Date of payment	VAT Liability account, for example, 2202	VAT deferral repayment	Instalment amount	T9	0.00

3. Click Save, then click Close.

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