Small business and tax blog

You do not get long to deal with each quarterly VAT return, and penalties can start being incurred if the normal filing and payment deadline of the last working day before the end of the following month is missed. Is there any way to get a little more time?

If the VAT return is late but it shows that a VAT repayment is due from HMRC to you, then no penalty is payable. While there is no immediate cost, the return is still treated as being late, which means:

• The period over which further penalties may be incurred is extended; and
• The business is more likely to be the subject of a VAT inspection.

If the return shows that a payment of VAT is due, then a short period of additional time is granted by paying the VAT electronically. This can be by internet or telephone banking, BACS or CHAPS. Remember that some methods of electronic payment may take a few days to process. The Bank of England is not yet part of the new Faster Payments Service, under which money can be transferred the same day.

By paying electronically, neither the return nor the payment will be treated as late if the return is received by HMRC and payment reaches their bank account within 7 calendar days of the end of the month. If this date falls on the weekend or a bank holiday, the due date becomes the last working day beforehand (normally the Friday).

It is not necessary to also file the VAT return online in order to benefit from this concession. The paper return can still be sent in the post as normal.

If you register for the online submission of VAT returns, you avoid the risk of the paper VAT return being delayed in the post, and you can set up a direct debit that automatically pays the VAT on the last possible day allowed (which is an extra 3 days later than other methods of electronic payment). It usually takes about 2 weeks to set up a VAT registered business for online filing of VAT returns.

The HMRC bank account details for electronic payments are:
Bank of England
Threadneedle Street
LONDON
EC2R 8AH

Sort Code: 10 00 00
Account No: 52055000
Reference: Your VAT number (without spaces).

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