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Can't Pay VAT Options?

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Written by

John A Waller


Updated May 3rd 2021

Can’t Pay VAT – Options

Can’t Pay Vat Options during the Coronavirus?

Following the coronavirus, your business may have been unable to pay VAT payments, without incurring a penalty. You possibly had therefore:

  • Deferred VAT payments due before 30 June 2020, and paid them any time up to 31 March 2021 or
  • Deferred your Self Assessment on account payable July 2020, until 31 January 2021.

If you had deferred VAT payments due between 20 March 2020 and 30 June 2020? You may then:

  • Pay HMRC the deferred VAT in full now;
  • Apply to join the VAT deferral new payment scheme, which closes 21 June 2021;

To firm this up. Make contact with the HMRC coronavirus (COVID-19) helpline (0800 024 1222) by June 30th, 2021, inform them, if unable to pay other tax bills. HBG Advisory offer Free Insolvency Advice

What occurs if your company fails to pay VAT?

A registered VAT company must submit its VAT return to HMRC on time and pay the amount due. Failing to do so prompts HMRC to report a default against your company internally.

Having then failed to pay, means your company has fallen into a’surcharge period’ for 12 months. During this period, your company will be charged an additional fee on top of its VAT bill based on its annual turnover and past default history.

Submitting a return with the intent to report lower VAT liability. Then prompting a 10% charge growing to 100%, 

Please Note: Failing to pay the VAT due without advising HMRC can lead to court action for the recovery, and even lead to compulsory liquidation. Directors need to take urgent action to avoid severe consequences.

Dealing with HMRC Company Debt is important for the future viability of your company.

For those who are Self-Employed and can’t pay VAT?

If you have incurred lost income due to the coronavirus, you possibly then can claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme.

Can’t Pay VAT Options – You must then take immediate independent financial advice

The following options are available if your company can’t pay VAT or has VAT arrears.

  • Raise additional working capital – Risky. You need to understand and not fund trading losses;
  • Time to Pay arrangement – with “HMRC” (“TTP”).- Direct talk with the HMRC is required URGENTLY;
  • Creditors’ Voluntary Liquidation – (“CVL”) – Arrange a meeting with a licensed insolvency practitioner;
  • Company Voluntary Arrangement – (“CVA”).- Again arrange a meeting with a Licensed Insolvency Practitioner;
  • Administration;
  • Pre-Pack Administration – Try to sell the business then before an administrator is appointed.

VAT Bill – When does payment fall due?

VAT returns require electronically filing, usually every three months. You therefore submit your business’s return within one calendar month and seven days following the end of an accounting period. The VAT payment then needs paying no later than the last seventh day of the month following month-end after quarter-end. If not, the businesses are subject to a fine.
Your quarterly VAT return shows:-

  • Net total purchases and sales;
  • Sum of VAT due to be paid to HMRC;
  • VAT reclaimed from HMRC;
  • VAT refund from HMRC.

HMRC VAT Payment Online

HMRC VAT payments may be performed online or by using:

  • Telephone banking;
  • Direct debit;
  • BACS Transfer:
  • Standing order;
  • Debit card or corporate credit card;
  • CHAPS;
  • Or at your bank or building society.

The bank details to credit with your payment:

  • Sort Code:08-32-00
  • Account Number: 11963155
  • Account Name: HMRC VAT

Reference number

You’ll need your 9-digit registration number to make a payment.
Find your registration number:

Do not put any spaces between the digits when paying your bill.

Confirm payment received

View your VAT online account for confirmation. The process takes approximately 48 hours to show up.

Distraint and a Creditors Voluntary Liquidation

As a rule, when your business can’t pay VAT. The HMRC may send, for example, a Distraint order letter, demanding immediate payment. Failing to comply will mean an enforcement officer attending with a distraint order. It would help if you took action to protect the company; its assets and the interests of creditors. Seek immediate advice from a licensed insolvency practitioner who can offer various solutions.

To consider a time to pay scheme, the HMRC requires the following:

  • Business tax reference number;
  • Name of your business;
  • Company Number (If Limited or LLP);
  • Duly authorised contact name;
  • Full trading business address; (Accounts)
  • Telephone number & Mobile;
  • Details of the outstanding tax.

Then you have to explain why:

  • The business cannot bring the tax up to date;
  • What if any funds are available to pay an amount on the account;
  • What actions you have taken to raise funds for the business to pay the TAX debt;
  • The time required then to bring outstanding TAX up to date?
  • Consideration of past payment record. Have you had Time to Pay before?

Finance for VAT when you can’t pay VAT

Ordinarily, consider a short term loan to bring working capital into your business to meet immediate cash flow requirements. Interest charges are usually high for short-term loan facilities, but maybe less than the penalty charged by HMRC.
Speak to your bank. Enquire as to eligibility for an overdraft facility.

HMRC no longer accepts personal credit cards. You may only use corporate credit cards, and a charge will be incurred.
Are you using an interest-free credit card? The HMRC charges a fee for card payment, which though is lower than penalty charges.

HBG DO NOT advocate credit cards to pay other debt. Explore short term finance. Examples are IWOCA, EZBOB and The Funding Circle for short-term financing.

Can’t Pay VAT Options – VAT & When Should You Start Yo Worry?

When you realise you owe VAT, not registered, or have fines for not paying, you then must react quickly. Contact the HMRC to then agree to an arrangement. You will therefore avoid hefty fines compounding the financial burden. Remember, however, the HMRC will never go away and will require resolving.
Call us today on 0800 612 5448 to arrange how we may help with dealing with HMRC pressures, and then HMRC eradicate the trouble of agonising about taxes when unable to pay the HMRC.

VAT HMRC Payment Helpline.

If you can’t pay, then the first call is to contact the “Business Payment Support Service (BPSS)” They are a Payment Helpline for businesses who are not able to pay and are struggling to meet their subsequent payments.
You need to call the “BPSS” at the HMRC if you are therefore unable to pay in full. Ensure, however, this is before your payment deadline.
You can contact the “BPSS” on 0300 200 3835.
The HMRC are open:
Monday to Friday, from 8 am to 8 pm;
Saturday, from 8 am to 4 pm;
When you can’t pay VAT, View HMRC VAT Help on:;
Complaining to HMRC – VAT;
If you wish to then complain to the HMRC regarding your VAT view – COMPLAIN ABOUT HMRC;
Vat deadline calculator.

If you require help when you can’t pay VAT:


HBG Advisory team have. However, extensive experience dealing with HMRC for businesses who can’t pay the VAT,
Please call us on 0800 612 5448 for 100% confidential, free initial, no-obligation advice.
Do not struggle.
If unable to pay your VAT. Then consider a

  • Creditors Voluntary Liquidation;
  • An Administration to then protect value in assets and jobs.

When visited by an HMRC bailiff, understanding what they can take is essential.

HMRC is the most prevalent creditor of businesses trading in the United Kingdom. Once a company falls behind paying any part of HMRC. Therefore, a problem for your company starts. HMRC, however, do not delete missed or late payments. Once extended, however, they will instruct bailiffs if the circumstance remains unpaid.

The HMRC do not instruct bailiffs at the first stage of a late or missed payment. HMRC then issue reminders, along with new fines and interest charges, to promote settlement early. Once started, you should then make direct contact with HMRC (as detailed above) and establish a solution. TAKE NOTE, the longer you ignore the problem; the less your chances of then reaching a compromise.
The HMRC only issue instructions to Bailiffs, as a last resort action.

Can’t Pat VAT Options – Is It A Criminal Offence To Avoid Paying VAT to HMRC?

Late payment to the HMRC for VAT is not a criminal offence. Ensure regular contact is maintained, keeping them informed of your situation. Moreover, in it helps stop them from escalating.

Can HMRC hold directors liable for outstanding tax?


When arrears reach a trigger point, they will send a ‘Notice of Requirement to Pay a Security for VAT’. A deposit is required, acting as a bond, to secure any future VAT debt. Security bonds have a 30-day payment term. Failing to deposit a bond with the HMRC is a criminal offence, and HMRC may then instruct the court for assistance in collection. Ensure you circumvent this, and additionally inform your accountant or have a chat with;

The Team at HBG Advisory

Support Is Just A Call Away
Seeking support with your under performing business?We can remove all the stress while allowing you to move forward with your business removing the fog for good. Please call us on 0800 612 5448 or Book A Virtual Meeting safe and private. We help directors daily to navigate the complexities of financial difficulty.
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