Tax & Accounting News

Changes to VAT payments by post

27/05/2010

Businesses which still make tax payments by post are being warned that, since 1 April, all cheque payments are being treated as having been received on the date when cleared funds reach the bank account of HM Revenue and Customs (HMRC).

This means that anyone paying by post must ensure they allow enough time for the payment to reach HMRC and for the funds to clear before the due date on their tax return.

Any cheque payments that do not clear by the due date could be liable to a late payment surcharge, even if the cheque has physically reached HMRC by that time. HMRC recommend that taxpayers allow three working days for postage and a further three working days for the cheque to clear – meaning payments should now be sent a full six working days before they are due.

Most firms now pay VAT electronically, and only businesses with an annual VAT-exclusive turnover of 100,000 or less, which are already registered with HMRC, are permitted to use paper returns and pay by cheque.

HMRC has stated this change does not affect cheque payments made by Bank Giro. It has also reminded businesses that paying electronically gives firms up to seven extra calendar days to pay, or ten days if paying by direct debit.