Paying VAT to HM Revenue & Customs or getting VAT refunds
In this section:
- How to pay VAT due to HM Revenue & Customs
- Getting a VAT refund from HM Revenue & Customs
- VAT filing and payment deadlines
- Missed VAT deadlines: penalties and surcharges
- What to do if you cannot pay the VAT due to HM Revenue & Customs
What to do if you cannot pay the VAT due to HM Revenue & Customs
This guide tells you what you should do if you are having problems paying VAT. It provides information on alternative VAT schemes that can change how much and when you pay, which may suit your business better. It tells you what happens if you file a late VAT return or do not pay your VAT due in full. It also includes advice on how to claim back VAT on bad debts.
On this page:
- Help with VAT payment problems
- Alternative ways to pay VAT
- Claiming VAT back on bad debts
- More useful links
Help with VAT payment problems
If you’re registered for VAT, you need to make sure you submit
your VAT return on time, along with any payment. If you don’t, you
could receive an automatic financial penalty. So if you think you won’t
be able to pay your VAT by the due date, you should act immediately. There
are several things you may be able to do to help yourself, and we’re
also here to help you.
First, there are some circumstances when you won’t have to pay a
penalty. Check to see if any of these apply to you. If they do, contact
us to explain the situation.
More about when
you won’t be surcharged for submitting your return or paying your
VAT late.
Contact
us
Then, it’s a good idea to check out the following two options. Depending on your circumstances, they could help to reduce the amount you need to pay.
- Make sure you have claimed any VAT back on bad debts, if you are entitled to. See the section below on claiming VAT back on bad debts
- Consider switching to the Cash Accounting Scheme, if you qualify. You can do this immediately and don’t need to notify us. See the section below on alternative ways to pay VAT
If you still won’t be able to make your payment, you must do all the following as a matter of urgency:
- Contact us as soon as possible. We’re here to help you and
we’ll examine your case sympathetically. Contacting us is the
most important action you should take
Contact us
- Submit your VAT return on time, even if you can’t pay the VAT.
If you don’t, you could be liable to additional financial penalties
More about when you won’t be surcharged for submitting your VAT return late
See our guide on penalties and surcharges for missing VAT deadlines - Tell your bank and your financial advisor about the situation
- Any surcharge or penalty is calculated on the amount still outstanding at the due date, so even if you can’t pay the full amount on time, pay as much as you can manage. This will reduce the penalty and could even stop it altogether
To avoid getting into this situation again, you may find that one of
the special VAT schemes makes it easier for you to meet your payments.
In some circumstances, the Flat Rate Scheme can even reduce the total
amount of VAT you have to pay to us over a year. See the section below
on alternative ways to pay VAT.
Failing to pay your VAT on time is a very serious matter - it’s
not just a question of being charged interest. You could face financial
penalties, court action or even bankruptcy.
Submitting late returns
If you submit a late VAT return, or you don't pay the VAT due in full, your business will be 'in default'. You may be liable for penalties and surcharges.
To avoid missing any deadlines, you can use our interactive tool to create a personal list of tax dates and receive email alerts reminding you of when forms and payments are due.
Find out how to register for email VAT reminders and alerts
Find out more about penalties and surchages
Alternative ways to pay VAT
If you are having problems paying VAT, you might want to take a look at schemes that offer alternative methods of payment. Some of these schemes change when you pay, and some change how much you pay.
- Annual Accounting Scheme - This allows you to pay in monthly or quarterly instalments based on an estimate of your total VAT bill for the year.
- Cash Accounting Scheme - This allows you to pay VAT only on the payments you receive from your customers, rather than the invoices you issue.
- Flat Rate Scheme - This allows you to record the VAT-inclusive total of all your business supplies - including exempt supplies - and apply a flat rate percentage to it in each period. The result is the VAT you owe us.
Read more about the Annual Accounting Scheme
Read more about the Cash Accounting Scheme
Read more about the Flat Rate VAT Scheme
Claiming VAT back on bad debts
If you have supplied goods or services but your customer hasn't paid for them, you may be entitled to a VAT refund. To make a claim, you need to:
- Have paid and accounted for VAT on the sale. This means that you cannot claim bad debt relief if you are on the Cash Accounting Scheme.
- Wait at least six months after the payment was due.
- Keep a copy of the VAT invoice and account details.
To make a claim, you need to state the amount of VAT you are claiming in box 4 of your VAT return. If the debt is paid later on, then you have to repay the VAT portion of it to us.
Read about reclaiming VAT on bad debts on goods or services supplied by you
More useful links
Read about the deadlines for submitting your VAT return and making payments
Find out about surcharges for late payments
Find out how VAT schemes differ to standard VAT accounting
Get information about the requirements for filing and payment deadlines
Find out what action we take when you don't pay us in VAT Notice 930
