The coronavirus VAT payment holiday gave businesses the chance to defer the payment of any VAT liabilities between 20 March 2020 and 30 June 2020. The option for businesses to defer their VAT payments ended on 30 June 2020.

In delivering his Winter Economy Plan to Parliament, the Chancellor confirmed that businesses will now have the option to pay back any deferred VAT in smaller payments over a longer period. Instead of having to repay the full amount by 31 March 2021, businesses will now be able to make smaller interest-free payments during the 2021-22 financial year and thus clear the VAT due by 31 March 2022. 

Businesses will need to opt-in to the new scheme and more information on the process is expected to be published over the coming months. Businesses that can pay their deferred VAT can still to do so by 31 March 2021. No interest or penalties will accrue on deferred payments that are paid by the new due date.

The choice to defer VAT payments was optional and businesses could still choose to pay any VAT due as normal. The deferral did not cover payments for VAT MOSS or import VAT. HMRC has continued to process VAT reclaims and refunds as normal during this time.