We understand just how important your time is as a hard-working business owner. If you’re spending all your time doing manual accounting tasks, then you’ll have less time to spend actually growing your business. That’s why keeping the accounting admin straightforward is so important – this includes paying your VAT bill.
When it comes to VAT payments, there are several ways to go about it. The most convenient option is usually through online banking or direct debit.
In this blog, our VAT experts cover the different ways you can pay your VAT bill and what happens if you happen to miss the payment deadline. Keep reading to find the best method for you.
If you’re keen on saving some time, then why not hire a professional VAT accountant to do the hard work for you? Contact Archimedia today to see what we can do for your business.
What methods are there to pay VAT?
There are many different ways to pay your VAT bill, some more simple than others. Let’s take a look at each of the options in more detail so you can find the best method for your business.
Direct debit
Direct debit payments are one of the most common and straightforward ways to pay online. Setting up regular payments means you won’t have to worry about manually paying VAT when it’s due, and most importantly, you won’t miss the deadline!
Unfortunately, your accountant can’t set up your direct debit through their agent account. So, you will need to do it on your own VAT account.
Don’t know how to do this? Take a look at our blog about setting up a Government Gateway account.
You should also set up a refund bank account so HMRC can transfer refunds directly to your bank account rather than sending you a cheque – this will mean one less thing to think about.
Bank transfer
If you’re looking to make quick and faster payments without setting up a direct debit, then you can also use your online bank account to pay with a debit or corporate credit card. This is a manual process, and while it does provide instant confirmation, you do need to remember to go online and make the payments before the deadline.
It’s important to remember that using a corporate debit or credit card for VAT payments can result in additional fees.
Cheque
Sending a cheque may be deemed a little old-fashioned, but some businesses may still use this method to pay their VAT bill. If you want to pay HMRC this way, you’ll need to order a ‘pay-in slip’ online or over the phone. You can then take this to the bank to send HMRC the money by cheque or cash.
Paying VAT by cheque can take longer, and you run the risk of it getting lost.
Can I pay VAT over the phone?
Unfortunately, HMRC won’t take VAT payments over the phone. But, if you really wanted to make a phone payment, you might be able to call your bank and set up a direct debit or bank transfer that way.
How to pay VAT on imports
Imports are another tricky part of VAT returns. The good news is that if you’re not actually the person importing goods (i.e. you’ve bought them and someone other than you or your company is transporting them into the country), then it’s quite easy for you.
If you use a courier to bring the goods in, then quite often, they will pay the VAT for you and send you an invoice with the courier service plus the VAT amount.
To reclaim this VAT, you’ll need more than the courier invoice. You’ll also need the C79 certificate issued by HMRC for that import.
How late can I pay my VAT?
There’s paying late, and then there’s submitting late. Really, there shouldn’t be any reason not to submit your VAT return on time, especially if you have a good accountant by your side.
But, as with everything in life, we have to prepare for the unexpected. So, if you can’t pay your VAT bill on time, you could get hit with penalties and added interest.
From day 1 of being late, you’ll start paying interest. This is calculated at the Bank of England base rate, plus 2.5% on what’s outstanding. To work out how much interest you accumulate, you’ll need to take the full figure, divide it by 365 and multiply it by the number of days outstanding.
After 15 days, you’ll get a fine calculated at 2% on the VAT you owe.
If your VAT payment is 30 days late, you’ll get a second fine calculated at 2% of what is still outstanding on day 30, along with another fine calculated at a daily rate of 4% per year on the outstanding balance. This is charged daily from the 31st day until the outstanding balance is paid in full.
While it isn’t always easy to reach out for help, we recommend you contact HMRC as soon as you think you won’t be able to pay your VAT bill. They will go through your options and may be able to set up a payment plan.
How to pay a VAT penalty
If you get a VAT penalty, it is essential to make a payment as soon as possible to prevent further financial stress. You can make a VAT penalty payment like you would a regular VAT payment – through your HMRC VAT account.
Not sure if you’re paying the correct VAT amount? Get in touch
At Archimedia, we care about you and your finances. As a family-run accountancy agency, we understand the pressure of managing a business and being financially secure, so we do everything in our power to help you reach peace of mind when it comes to tax.
Our VAT services support businesses with a number of VAT matters. Whether you’re struggling with registration or need help figuring out how much VAT to pay, our team will help. Get in touch with us today to discuss your VAT needs.
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