Expert help and advice on VAT issues

Updated on June 2, 2022

What are my options when I cannot pay the VAT?

If you are unable to pay the VAT, your firm has a number of choices that may be able to assist you. HMRC is eager to assist those who are having trouble paying their VAT or other tax obligations, and may be able to set up a Time to Pay (TTP) plan to help you return what you owe. If your VAT arrears are only part of the company’s total unsustainable debts, a formal insolvency option may be more suited.

I can’t pay the VAT – what are my options?

If you can’t pay HMRC taxes or VAT, you may be eligible to request a Time to Pay Arrangement with HMRC to restructure your payments into more manageable instalments. If a company can’t pay its creditors or cover its operating costs, it may be approaching insolvency.

What happens if I am unable to pay the VAT my company owes?

If you’re unable to pay VAT, you have a few options:

First, HMRC has a time-to-pay contract with the government (TTP). In some cases, HMRC may allow you to pay back outstanding VAT payments over a maximum of 12 months in monthly instalments.

1) Creditors’ Voluntary Liquidation or a Company Voluntary Agreement (CVA) (CVL). The company should either negotiate new conditions with HMRC or close down if there is no future.

3) Select Administration or Pre-Pack Administration from the drop-down list.. Hire an Insolvency Practitioner (IP) to save your firm from bankruptcy.

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What is VAT and do I have to pay it?

Businesses in the United Kingdom whose taxable revenue exceeds, or is expected to exceed, £85,000 are subject to VAT, or Value Added Tax. Companies must register for VAT if their annual turnover exceeds this threshold, however any company can opt to do so on a voluntary basis. The submission of frequent VAT returns is one of the many responsibilities that come with being VAT registered, whether voluntarily or not.

How often do I have to pay my VAT bill?

Unless you receive a specific dispensation, you must file your VAT returns electronically every three months. Unauthorized filing of paper tax returns is punishable by a £400 fine. The deadline for filing returns and making full payment of any VAT due is one month and seven days after the end of an accounting period.

My accountant has calculated my VAT return incorrectly – do I still have to pay?

When it comes to your company’s finances and taxes, even if you’ve hired an accountant, you’re still held accountable as the company’s director for making sure any reports or accounts you submit accurately reflect your business. Consequently, if your accountant makes a mistake and you end up with an enormous bill to cover missed or insufficient past VAT payments, you must set aside funds to pay for it right away. You cannot use an accounting blunder as a reason for not or late payment of your VAT obligation.

What happens if I do not submit my return or pay my VAT bill on time?

To avoid a’surcharge period’ if you fail to submit your VAT return on time, HMRC will automatically issue a default on your account, and you will be unable to pay your VAT bill.

First-time offenders will not face a penalty fine for the first 12 months, but further failures to pay on time and in full will lead to additional costs, usually a percentage of the outstanding VAT amount. With each missed payment, the % fee goes up, and the 12-month grace period is extended. This is a recurring charge.

It’s easy for the amount of money you owe to spiral out of control if you’re late with your VAT payments. Once this happens, getting back on sound financial ground can be a real challenge. As a result, you must act immediately to avoid further charges being accrued.

What is a VAT notice of assessment?

HMRC will give you a “VAT notice of assessment of tax” if you fail to file your VAT return or pay the required amount. This is a rough estimate from HMRC of the amount of VAT you owe. HMRC has 30 days to issue a corrected VAT return and payment if you consider the estimate is too low after you get such an assessment. If you pay an assessment that you are aware is lower than it should be, you may be subject to a penalty.

There is no appeals process if you know that the assessment amount is more than it should be.. As an alternative, you must file a VAT return and make a payment equal to the full amount payable.

Your quarterly VAT return should still be submitted regardless of whether you can afford to pay the tax. However, it also avoids you from being issued an inflated notice of assessment by showing HMRC that you are prepared to comply with your VAT duties even if your finances are not capable of paying what you owe.”

What happens if I am unable to pay the VAT my company owes?

If you know your firm will not be able to clear VAT arrears and stay on top of its tax responsibilities moving forward, you will need to put a written strategy in place. While certain concessions are given for the occasional late payment.

Allowing firms to pay back their tax debt through monthly instalments is permitted by HMRC, as long as they consider the company has a fair possibility of paying back the money they have accrued. HMRC prefers shorter-term Time to Pay (TTP) agreements, which typically last no more than a year, to longer-term TTP agreements.

Distraint and even a possible Winding Up Petition may be served on your firm if you fail to pay your VAT payment on a regular basis. Although HMRC is reasonable and will listen to businesses who are suffering to keep up with their taxes, they will not hesitate to take significant action against those companies who refuse to engage with them or who do not strive to find a workable solution. HMRC is.

Consider the reasons behind your inability to pay

What causes you to be unable to pay your VAT or other applicable taxes? You must identify and resolve this issue. Knowing what’s causing your issues will help you design a strategy for dealing with it.

Your short-term cash flow may be drying up because your debtors aren’t paying their bills on time. Be sure to follow up on these late payers and reassess your current collection technique and payment terms in the future if you find yourself in this situation.

There are several reasons why a firm may be unable to meet its financial obligations, but one of the most common is a lack of funds. It is suggested that you seek the advice of a certified insolvency practitioner who can assess your current financial status and provide you with information on your available options. Formal negotiations with creditors via a Company Voluntary Arrangement (CVA) or, if debt levels are exceptionally high, consideration of closing options.

Need to speak to someone?

Do you need to get in touch with someone?
Debt, cash flow issues, and unclear futures are not unique to your firm. You’re not the only one. It’s not uncommon for us to talk to company leaders like yours every day, and we’re here to help.
Dial 0808 253 3335 to speak with a representative now.

Contact Real Business Rescue for further help

It is imperative that you get expert assistance as soon as possible if you are struggling with growing VAT, tax, or supplier debts. These debts aren’t going anywhere, and the longer you wait to deal with them, the worse off you’ll be. With a nationwide team of licenced insolvency practitioners, Real Business Rescue is here when you need it most. Make an appointment with a member of our knowledgeable staff as soon as possible.

Our expert and non-judgemental team are ready to assist directors and stakeholders today.

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