If your business is registered to pay Value Added Tax (VAT), you are responsible for ensuring your returns are submitted to HMRC and paid on time. In this guide, we’ll be explaining the basics of how to pay your VAT bill so you can avoid any nasty surprises or late VAT payments.
When are the Deadlines for Filing and Paying Your VAT?
The deadline date for paying your VAT bill depends on how often you submit your tax return, however most businesses submit their VAT returns quarterly or annually.
If you submit your VAT returns to HMRC on a quarterly basis, then you must pay your bill by midnight one calendar month and seven days after the end of the quarter.
For example, If you are submitting your VAT return for the quarter ending 31 March 2022, the deadline for paying your bill is 7 May 2022.
Some businesses use the Annual Accounting Scheme, a scheme set up to allow small businesses submit just one VAT return annually as opposed to the normal four, reducing paperwork and helping with budgeting and cash flow.
Businesses that use the Annual Accounting Scheme must make their VAT payments within two months after the end of their financial year.
For example, if your financial year ends on 5 April 2022, the deadline for making your VAT payment is 5 June 2022.
If your business has struggled to make its VAT payments in the past, or frequently exceeded the threshold for quarterly payments, HMRC may ask you to file and pay your VAT monthly. In this case, you must make your VAT payment within one month and seven days following the end of the period.
For example, if your period ends on 31st December 2022, the deadline for paying your VAT bill is the 7 February 2023
How to Make Your VAT Payment
Once you have submitted your VAT return, you will either receive a repayment or you will need to make a payment to HMRC. The easiest way to do this is to set up a Direct Debit. Then all you have to do is submit your VAT return and HMRC will automatically take out any payments that are due, so you don’t have to worry about making your payment on time.
Other payment methods are available, however it is worth noting that these will need to be made manually and it is your responsibility to ensure they are made before the deadline with enough time for payment processing.
Same or Next Day payments can be made online or by telephone banking, or you can make payments via Direct Debit, BACS, debit or credit card and bank or building society, but this can take three days to clear, so if you’re making a payment close to the deadline, you’re better doing it online or by telephone.
It’s also important to note that if the payment deadline falls on a weekend or public holiday, you must ensure the VAT payment has landed in HMRC’s account by the last working day before the deadline.
How to Make an Online or Telephone Bank Transfer
To make an online payment, click here.
To make a telephone bank transfer, you will need to call your bank’s telephone banking service and have HMRC’s payment details and your 9-digit VAT reference number to hand.
HMRC’s VAT Payment Details
|Sort Code||Account Number||Account Name|
|08 32 00||11963155||HMRC VAT|
Your VAT Registration Number
You can find your 9-digit registration number in your online VAT account or on your VAT registration certificate.
What Happens If I Don’t Pay My VAT Before the Deadline?
If you fail to make your VAT payment in full by the deadline, you won’t have to pay a surcharge, however, you will enter a 12 month surcharge period.
During this time, if you default again by making a late payment or failing to pay in full, you may have to pay a surcharge amount on top of the VAT you owe and the surcharge period will be extended for a further 12 months.
|Defaults within 12 months||Surcharge if annual turnover is less than £150,00||Surcharge if annual turnover is £150,000 or more|
|2nd||No surcharge||2% (no surcharge if this is less than £400)|
|3rd||2% (no surcharge if this is less than £400)||5% (no surcharge if this is less than £400)|
|4th||5% (no surcharge if this is less than £400)||10% or £30 (whichever is more)|
|5th||10% or £30 (whichever is more)||15% or £30 (whichever is more)|
|6th||15% or £30 (whichever is more)||15% or £30 (whichever is more)|
Expert Help with Your VAT
VAT is one of the most complex and demanding tax regimes imposed on businesses – so complex that many businesses inadvertently overpay or underpay VAT.
Put simply, it’s a bit of a pain. The ever widening scope of VAT, constant stream of detailed changes to the regulations, and ever growing demands of HMRC call for a trained professional eye to ensure that you do not fall foul of the regulations and end up paying the Exchequer more than you need to!
Save time and money with Ryans
At Ryans Chartered Accountants in Bolton, we provide an efficient cost effective VAT service, which includes:
- Assistance with VAT registration
- Advice on VAT planning and administration
- Use of the most appropriate scheme
- VAT control and reconciliation
- Help with completing VAT returns
- Planning to minimise future problems with HMRC
- Negotiating with HMRC in disputes and representing you at VAT tribunals
To save yourself a job and a half and potentially a lot of money, get in touch with our team today.