How to get time to pay UK VAT

How to get Time to Pay UK VAT?

While we can all benefit from the Q1 2020 deferral of VAT due until March 2021 (see here), did you know there was easy access deferral for other taxes as well?  (see more here).  So while this should all help us get through our problems right now, what happens when the current facility runs out and you have problems paying other VAT returns?  So read on to find out how to get Time to Pay UK VAT?

Handled in the right way you can get really valuable help from HMRC’s Business Payment Support Service (BPSS) by agreeing ‘Time to Pay’ (TTP).

Here’s how to get the best answer:-

1. Paramount is to contact the BPSS on 0300 200 3835 before the payment due date.  This is because an agreement before this date will:

  • Avoid a default surcharge being recorded (although interest will still be charged);
  • Prevent the 12 month default surcharge rolling period being extended, and
  • Not cause the default percentage to increase.

If you delay and contact them after the payment has legally fallen due or fail to adhere to the terms of the arrangement then you will forfeit all of these benefits. This is why timing is the most important first step.  Sooner is always better.

2. Work out a sensible proposal taking into account future VAT liabilities.  Make sure you feel confident you can fulfil the payment schedule.  Do your homework in projecting future sales so you can show how you have taken these into account when devising your TTP proposal. 

3. It can be a good idea to schedule a longer gap between the TTP instalments through the time when the next return falls due, which might help you to make sure you can honour the TTP agreement.  

4. Offer to make an immediate payment and then to pay the instalments by Direct Debit. 

5. The approach to the BPSS should include details of why TTP is required.  HMRC will only help businesses with temporary financial difficulties and will not prop up businesses that are not viable so this is where your homework plays a key part.  HMRC will take into account the duration of the proposed TTP schedule and prior payment history.  They need to be satisfied about your ability to both pay the debt and make future payments by the due dates so the time spent preparing your TTP proposal should not be wasted.  This should include:

  • An explanation of why you are unable to pay the due tax in full and on time;
  • What you have done to try to raise the money to pay the tax;
  • How much you can pay immediately; and
  • How long you need to pay the balance.

6. If there is a change in your circumstances you should contact HMRC promptly and ideally before missing a payment.

So ‘how to get Time to Pay UK VAT?’ As with almost anything in business the best way is through to early and clear communication. In this, as with all things related to VAT – sooner is always better.

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