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Online payment plans for VAT – Is your business eligible?

HM Revenue & Customs (HMRC) has started an online payment plan system for businesses that owe less than £20,000 in VAT.

This initiative, which came into effect on 31 May, forms part of HMRC’s broader strategy to digitise tax reporting and payments, aiming to reduce the reliance on contacting HMRC advisers for assistance.

With this new development, businesses across the country can now set up payment plans with ease, without enduring lengthy call queues and offering relief to HMRC advisers.


How do you qualify?

To qualify for an online payment plan, businesses need to meet the following criteria:

  • Have filed your most recent tax return
  • Owe £20,000 or less in VAT
  • Be within 28 days of the payment deadline
  • Have no existing payment plans or debts with HMR
  • Pay off the debt within six months

Businesses enrolled in the Cash Accounting Scheme, Annual Accounting Scheme, or making payments on account are ineligible for setting up an online payment plan and must contact HMRC through the regular channels.

To establish an online payment plan, the following information is required:
  • Relevant reference number for the tax to be paid (e.g., unique tax reference number)
  • Bank account details
  • Details of any previous missed payments 

Self-Assessment and PAYE plans

Online payment plans can also be established for Self-Assessment tax returns and employers’ PAYE contributions, each with their specific eligibility criteria.

For Self-Assessment repayments, online payment plans can be arranged if the latest tax return has been filed, the owed amount is £30,000 or less, the business is within 60 days of the payment deadline, and there are no existing payment plans or debts with HMRC.

Regarding employers’ PAYE contributions repayments, an online payment plan can be set up if the owed amount is £15,000 or less, the business is within 35 days of the payment deadline, and the debt is paid off within six months.

Additionally, businesses wishing to establish an online payment plan for PAYE contributions must have submitted all due employers’ PAYE submissions and Construction Industry Scheme (CIS) returns.

Businesses also need to make sure there are no outstanding penalties, debts, or payment plans with HMRC.

If you would like more advice and information on this, do not hesitate to contact us today.