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Repayment of UK VAT deferred due to coronavirus

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Summary

To support businesses with their cash flow during the Coronavirus outbreak, UK businesses were allowed to defer VAT payments which were due between 20 March and 30 June 2020. If you deferred your VAT payments, there were a few options to help you pay the VAT and avoid interest and penalties.

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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 had until 31 March 2021 to pay the deferred amount without incurring interest or penalties.

Repayment options

HMRC announced a further VAT deferral payment scheme to help businesses repay the deferred VAT. Under the scheme, you could choose to pay your deferred VAT in equal instalments, interest free and choose the number of instalments that suits you, from 2 to 11.

Applications to join this scheme closed on 21 June 2021 and for those businesses who didn't join the scheme, any deferred VAT outstanding after 30 June 2021 will be treated as debt and may incur a penalty. Read more >

If you're struggling to pay your outstanding VAT debt, you should contact HMRC.

Recording your repayments in Sage 50cloud 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 50cloud Accounts click Bank accounts, click the relevant bank account then click Bank payment.
  2. Enter the payment details as follows:
    BankDateN/CDetailsNetT/CTax
    Your bank accountDate of paymentVAT Liability account, for example, 2202VAT deferral repaymentInstalment amountT90.00
  3. Click Save, then click Close.

Additional questions you may have

To help support you, we've put together a handy coronavirus UK VAT deferral FAQs guide.

This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For VAT, customs and excise and duties enquiries you should call the HM Revenue and Customs (HMRC) National Advice Service Helpline on 0300 200 3700, contact your local HMRC office or visit their website at www.hmrc.gov.uk In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.
The VAT or tax codes used in this article are based on the default or recommended codes set up in the software. These may be different in your software.