Most common mistake made when paying the VAT
I often get asked, ho much VAT am I due to pay? When is it due with HMRC? The killer question that people can easily overlook is HOW to pay your VAT bill. HMRC's system in relation to 'date paid' can fluctuate to say the least. The bottom line.... "How can I avoid paying an unnecessary surcharge in relation to my VAT?"
The simple way is this
1) Work out your VAT period (usually 3 months)
2) Work out WHEN the payment is actually due.
Here's an example: VAT Quarter period: 01 August 203 - 31 October 13
VAT return submission due date and payment due by: 30 November 2013
As ALL VAT payments HAVE to be made electronically, HMRC allow you a further 7 days ‘grace’ period to ensure electronic payments hit their account by 7th if you don’t have it collected by Direct Debit (this is usually between 10 – 12th of the following month). In this example the money would be collected around 10-12 December 2013.
If you make a BACS/Chaps payment on the due date (7th), this will still be classified as late (and perhaps subject to a surcharge) as the money will take a few more days to reach HMRC's bank. Even if your bank statement says it was paid on 7th ….it doesn’t matter. What DOES matter is WHEN it reached HMRC’s account. So if you must insist on BACS payments (which I never recommend) then please make sure you would pay on 30 November, ensuring that you have given that payment 7 days to reach HMRC (7 December). Remember all banks BACS payments vary so please check with your bank first (don’t forget about weekends too!)
Imagine if you had the payment all set up in time, but the security settings at your bank wouldn’t allow such a large payment to go through… this would lead to a surcharge too.
This is why it's best that if you pay by BACS/CHAPS to make the payment on the actual due date. I would suggest Direct Debit being the safest payment option (HMRC have a section within the "login" screen that allows you to set this up over the internet. As HMRC collect the DD's on the correct date, you will not be subject to a late payment surcharge (these can increase to 15% of your VAT liability!).
If you feel that you would like to 'take charge' as to when the VAT is collected from you, know that a debit card payment made to HMRC, is classified as received that day too.
Simply call 0300 200 3835 quoting your VAT number and VAT period. Or to save money on telephone calls - use this payment link:
The bank account details are as follows:-
Sort Code: 08-32-00 Account number: 11963155 Account name: HMRC VAT
Reference number - (put your vat number is, no gaps)
Address of the bank to which the payment is going: