Q&A: I can't afford my next VAT bill, what can I do?
Question: I have an upcoming VAT payment due and I don’t have the funds to make the payment, what can I do?
Don't worry, HMRC has acknowledged that many businesses are currently experiencing cash flow problems.
If you're in this situation, we suggest considering the Time to Pay options provided by HMRC. To ease VAT pressures, HMRC has been offering certain businesses the opportunity to set up online VAT payment plans starting from 31 May, 2023. You can access this via your online business government gateway account.
These online payment plans are available to businesses that meet the following conditions:
You are not using the cash accounting or annual accounting schemes for VAT purposes.
You are not making VAT payments on account.
You have submitted your latest VAT return.
They owe HMRC £20,000 or less.
The payment deadline is within 28 days.
They do not have any other payment plans or debts with HMRC.
They plan to pay off the liability within the next six months.
If you meet these conditions, you can apply online for a payment plan, which should help with your immediate cash flow issues.
Having an agreed plan in place will reduce the risk of incurring late payment penalties, although HMRC will still charge interest at their official rate.
If you're unable to use the online payment plan, we recommend contacting HMRC as soon as possible to discuss the next steps.
If you need assistance with your VAT affairs or managing your cash flow, we're here to help, please get in touch.
