VAT Tax Debts

If a business is registered for VAT it is required to submit and pay its VAT Return on time. Failure to do so will result in an automatic surcharge being levied. Even if you cannot pay the VAT due you must still submit the VAT Return, as further penalties may be levied if you don’t.

There are options available if you find that you are unable to pay in full and on time, although it is important that you act quickly to enable your advisor to contact HMRC at the earliest opportunity. If this is the first instance in which payment has not been made the matter will be handled by HMRC Business Support Unit who will discuss short term payment options such as time to pay arrangements or payment by instalments.

HMRC have also introduced alternative payment schemes to assist business who are faced with difficulty in paying VAT, such as flat rate, cash or annual accounting.

These can change when VAT is paid or how much is paid.

VAT Bad Debt Relief

A business is entitled to a VAT refund if goods and services have been supplied and it hasn’t been paid, if:

  • A period of six months has elapsed since the payment due date
  • A copy of the VAT invoice and account details can be supplied
  • The business has accounted for and paid the VAT it is seeking to reclaim.

Every company with tax debt issues will experience them for different reasons but some of the most common causes are:

  • Over trading
  • Declining profit margins
  • Reduced cash flow

An experienced advisor can help you deal with VAT problems and find the most appropriate solution to assist your business.