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United Kingdom

VAT Bills: How and When to Pay?

After submitting a VAT return, every company needs to either pay or receive the VAT difference. While the VAT difference transferred to the company by default goes to their bank account as shown on their application details, there are many options of how to deal with VAT payments to HMRC. In this article, 1stopVAT team explains the methods of VAT payment in the UK and discusses the means to help you pay your VAT quickly and on time.

When to pay VAT to HMRC?

VAT returns must be submitted seven days after the end of the month following the conclusion of the VAT period. This deadline also applies to paying VAT difference to HMRC. VAT payments must be fully completed by the end of this period, which means that it is not enough to send the money before the deadline, but it is also crucial to make sure the transfer reaches HMRC within this time frame.

What happens if I miss a payment deadline?

Late VAT payments result in financial penalties and even more so when they are recurrent. Surcharges, a term for these penalties, can be as much as 15% of the VAT due. After a missed payment, a year-long probation period is started for the company, with more severe repercussions for any other delayed VAT payment in the meantime.

How to pay VAT using Direct Debit?

If you use HMRC account to submit your returns, you can pay VAT directly from there. Using HMRC VAT account, you can submit Direct Debit which will automatise the payments to the HMRC. To complete a VAT payment on time, you should set up Direct Debit by connecting your bank account with your VAT portfolio at least three days before submitting a VAT return. After that, payments will be automatically completed after concluding each VAT return via the HMRC account.

How to pay VAT using other methods?

Other ways to pay VAT include Faster Payments (online or telephone banking), CHAPS and Bacs. To pay VAT using these methods, you will need your VAT registration number which can easily be found in your online VAT account or on your VAT certificate. For an additional fee, you can also pay VAT online, using your corporate credit or debit card. Companies who are not prepared to use online payment methods can pay with paying-in slips at their bank or building society. These cheques should be payable to ‘HM Revenue and Customs only’ and include the VAT number of the company.

Businesses that account for VAT on an annual basis can sign up for paying by standing order when submitting the application form for the Annual accounting scheme. In such a case, payment can be set up using form VAT 622 or via online and telephone banking.

How soon will my transfer reach HMRC?

Payments done via Direct Debit are collected automatically three days after a return is made. Telephone banking and CHAPS are usually cleared during the same or the next day, while BACS, credit or debit card, paying-in slips and other payments can take up to 3 days.

You can check whether your payment has been received by going to your VAT account, where your payment status is updated within 48 hours after a transfer is completed.

How to pay VAT if I use VAT MOSS platform? Digital sellers registered in the UK can pay for MOSS VAT using online or telephone banking, CHAPS or Bacs. The MOSS payments usually reach tax authorities within three days. It is important to note that you cannot combine VAT MOSS payment with regular tax return payments as these transfers should go to different HMRC accounts.