March 26, 2010 - Anonymous
Businesses must allow enough time for cheques to clear when paying VAT or risk incurring a fine, HM Revenue & Customs (HMRC) has warned.
From 1 April 2010, cheques will be only treated as received by HMRC when cleared funds reach its bank account – not the date the cheque arrived in the post. This means that businesses must allow enough time for payment to clear by the due date on their VAT return or risk being charged a penalty.
“To allow for possible postal delays, which HMRC isn’t responsible for, businesses should allow at least three working days for a cheque payment to reach us and a further three days for the payment to clear our bank account,” said an HMRC spokesman.
Also from 1 April 2010, all businesses with an annual turnover of £100,000 or more (exclusive of VAT) and all newly registered businesses must file their VAT returns online and pay any VAT due electronically.
According to the HMRC, the changes have been designed to encourage more businesses to settle their VAT bill electronically, and remove the current “cashflow advantage” from firms paying by cheque. “Paying electronically is also more secure,” said the HMRC spokesman.
Businesses that make payments by bank giro will be unaffected by the change.