Published: 30th March 2020
HMRC applies a systemised process of penalties and surcharges when your company defaults on its VAT liabilities. This includes the late filing of your VAT return as well as the payment of tax.
The deadline for filing and payment is generally one calendar month plus seven days from the end of each accounting period, but you should also include the time needed to clear payment in HMRC’s bank account.
It is worth noting that no surcharge will be applied if you pay the outstanding VAT amount in full, even if your return was filed late. HMRC can send VAT filing reminders if you check the requisite box within your company’s online account.
Begbies Traynor is able to help you negotiate with HMRC for more time to pay your tax liabilities, whether VAT, corporation tax or PAYE. Time to Pay arrangements can be valuable in cases where default is a possibility.
Smaller businesses with a turnover of less than £150,000 are treated slightly more leniently than larger businesses in this process.
The surcharge period can be extended by HMRC, in which case they will send a ‘Surcharge Liability Notice Extension’.
In certain circumstances, HMRC will charge interest on underpaid VAT if you:
You have 30 days in which to pay the amount stated in HMRC’s notification letter, after which further interest payments will be charged.
There will be no surcharge payable if you submit a late return, but have no tax to pay.
One of the reasons why it is so important to pay HMRC on time is that defaulting on any tax liability indicates to them that you may be approaching insolvency. HMRC are known to be unrelenting in the pursuit of debt.
Begbies Traynor are licensed Insolvency Practitioners operating from an extensive UK office network. We are able to offer a same-day consultation free of charge to discuss your situation.