Q: I run a small business. Due to a cashflow issue, we’re struggling to pay our next VAT bill in full and we’ve only got 20 days until payment is due. What are our options?
A:It can be difficult for any business when something like this arises. However, there is a possibility that you can come to an agreement with HMRC to set up a phased payments plan.
Since the start of the year if a business that pays VAT proposes a plan to pay in instalments within 15 days of the payment being due, and HMRC agrees it, it would not get charged a late payment penalty. That is, of course, dependent on sticking to the conditions of the agreed plan. HMRC might cancel it if you don’t. So, although you’re running out of time, you could be eligible for this support, but it’s vital you contact HMRC as quickly as possible.
Otherwise, you could face penalties. Late payments attract interest charges and they’re applicable from day one it’s overdue.
This is what HMRC says: “If HMRC agree a Time to Pay arrangement with you, it can mean lower, or no, late payment penalties. It can cover all outstanding amounts due, including penalties and interest.”
Get in touch with the Payment Support Service to discuss your finances and the amount you can pay off each month of your outstanding VAT bill.
If you need any further assistance understanding VAT rules, payments and penalties, please contact our team.
