If you and your company are having VAT problems and can’t make an HMRC payment then it is likely to be a symptom of something going wrong within the business. For directors of a limited company, owing taxes and not being able to make a VAT payment may well provide a clear indicator that the company is insolvent.
What happens if you don’t de-register for VAT?
Unfortunately, the shock of a relatively large and unexpected HMRC VAT bill can cause huge problems to the company’s cash-flow as HMRC will want the VAT calculated retrospectively. Another common error is not de-registering for VAT for whatever reason. In such circumstances, the tax burden when the company’s revenues are falling can be dramatic.
What happens if I file my VAT return late?
If you file your HMRC VAT returns late and you are in arrears then you may receive a surcharge which will increase the debt burden further. Clearly, higher business costs will be exactly what you don’t need if your cash flow is already problematic. The surcharge period lasts for 12 months.
Is it a criminal offense to be in arrears with VAT?
Being late or in arrears with VAT is not a criminal offense. You simply need to get in touch with HMRC as soon as possible so that they’re aware of your circumstances and don’t feel the need to escalate things.
What happens if you pay VAT late to HMRC?
If you are late paying VAT to HMRC, you will face either a financial penalty or alternatively a Surcharge Liability Notice depending on your VAT payment history and whether you are a first time or a repeat offender. First Default: A Reminder Letter
What to do if you miss a VAT payment?
If you are unable to find the funds to bring your account up to date immediately, one option is to speak to HMRC about the possibility of a Time to Pay (TTP) arrangement. This lets a company settle its tax arrears through a series of monthly repayments rather than having to pay the whole amount at once.
