Finance Article - October/November 23
Your Questions Answered by TaxAssist Accountants
What are HMRC’s online Time to Pay arrangements for VAT?
I have an upcoming VAT payment due and I don’t have the funds to make the payment, what can I do?
Don’t fret, HMRC have recognised that many businesses are having cash flow issues at the moment.
In this instance, we would recommend you consider the available time to pay options set by HMRC. To alleviate VAT pressures, from 31st May 2023, HMRC has been granting certain businesses the option of setting up online VAT payment plans.
These online payment plans will be available to businesses meeting the following conditions:
- For VAT accounting purposes, the cash accounting or annual accounting scheme is not being used
- VAT payments on account are not being made
- the latest VAT return has been submitted
- they owe HMRC £20,000 or less
- the payment deadline is within 28 days
- the business does not have any other payment plans or debts with HMRC
- they plan on paying off the liability within the next six months
Should you meet the conditions, an online application can be made, hopefully aiding the immediate cash flow issues. However, as you will appreciate, the 28 day notice period does not give you much time, therefore forward planning is key.
Having an agreed plan in place will mitigate a business’ exposure to late payment penalties being issued, although interest will still be charged at HMRC's official interest rate.
If this online payment plan can’t be utilised, we recommend contacting HMRC as soon as possible to agree next steps.
Should you need guidance with your VAT affairs or managing your cash flow we are here to help.
Information supplied by Cheryl Hopkins, Chartered Certified Accountant, TaxAssist Accountants. Advice shared in this article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayers’ circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take, action, as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.