Tax Tip 14 : How to get extra time to pay your VAT (with no penalties)

If you submit your VAT returns on the standard green paper form then both the VAT return and the payment (cleared funds) must be with HMRC by the end of the month following your VAT quarter.

Since April 2010, all businesses with sales > £100,000 and new VAT registered businesses must submit their VAT returns electronically. The benefit is that you have an extra 7 days to submit the return and pay the VAT. The downside is that you need to transmit the payment a few days before the 7 day time limit to ensure that HMRC have received it on time (as a standard internet banking transfer to HMRC takes 2 or 3 business days to arrive).

However a little know method to extend the VAT payment time even further is to set up a direct debit payment with HMRC. You still need to submit your VAT return by the 7th. However the payment is taken by direct debit on the closest business day to the 10th of the month. In practice this means the payment will come out of your bank on the 10th, 11th or 12th of the month.

This gives you extra time to pay, and crucially it means you don’t have to worry about paying your VAT late!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s