Can’t Pay VAT – Options

Can’t Pay VAT – Options. Written by John A Waller, Director. Updated May 28th, 2024.

Can’t Pay Vat – Options during the Coronavirus?

Following the Coronavirus, your business may not have been able to pay VAT payments without 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;

HMRC provide a VAT support services telephone number: 0300 200 3701.

HBG Advisory offer Free Insolvency Advice. All is not lost. The sooner you open up and deal with VAT issues the better.


What happens if your company fails to pay your VAT Bill?

A registered VAT company must submit its VAT return to H M Revenue and Customs HMRC on time and pay the amount due. Failure 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: Failure to pay the VAT due without advising HMRC can lead to court action for recovery, and even 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.

Can'y pay VAT to HMRC
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For those who are Self-Employed and can’t pay VAT?

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

As a company director, it is essential to deal with HMRC company debt. Art HBG Advisory, we can support directors through this often stressful period.

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;
  • Arranging a Time to Pay with HMRC (“TTP”). – Direct talk with HMRC is required URGENTLY;
  • Creditors’ Voluntary Liquidation CVL – Attend 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.

Can’t pay VAT – options and your VAT Bill – When does payment fall due?

The due date for VAT returns requires electronic 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. You may pay VAT online no later than the last seventh working day of the month following month-end after quarter-end. If not, the businesses are subject to a fine.
Your quarterly VAT return shows the following:-

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

VAT Annual Accounting Scheme

With VAT Annual Accounting Scheme, you:

  • Make advance VAT payments towards your VAT bill – based on your last return (or estimated if you’re new to VAT).
  • submit 1 VAT Return a year.

When you submit your VAT Return, you either:

  • make a final payment – the difference between your advance payments and the actual VAT bill
  • apply for a refund – if you’ve overpaid your VAT bill

The scheme would not suit your business if you regularly reclaim VAT, because you’ll only be able to get one refund a year (when you submit the VAT Return).

If your estimated VAT taxable turnover is £1.35 million or less, you qualify to join the scheme.

How often do I need to pay my VAT?

As a VAT-registered company, HMRC requires VAT returns to be submitted electronically every three months, unless you have permission to do so manually. The filing of paper returns without prior permission costs £400. The company must file returns within one calendar month and seven days following the end of an accounting period. The deadline for full payment of any VAT due is the same date.

HMRC VAT Payment Method Online

HMRC VAT payments may be performed online or by using the following:

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

How to pay VAT online

The bank account details to credit with your payment:

Bank details:

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

Reference number

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

  • In your VAT online account;
  • On your VAT registration certificate.

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. Failure to comply will mean an enforcement officer attends 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 have you taken to raise funds for the business to pay the TAX debt;
  • The time required 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 may be less than the penalty charged by HMRC.
Speak to your bank. Enquire about 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 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, are not registered, or have fines for not paying, you must react quickly. Contact the HMRC to agree to an arrangement. You will therefore avoid hefty fines, which compound the financial burden. Remember, however, that the HMRC will never go away and requires resolving.
Call us today on 0808 280 3581 to arrange how we can help with HMRC pressures. Then HMRC eradicates the trouble of agonising about taxes when unable to pay the HMRC.

VAT HMRC Payment Helpline.

If you can’t pay, the first call is to contact the “Business Payment Support Service (BPSS)” They are a Payment Helpline for businesses who are unable to pay and struggling to meet their subsequent payments.
You need to call the “BPSS” at the HMRC if you cannot pay in full. Ensure 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;

We are closed on weekends and bank holidays.
When you can’t pay VAT, View HMRC VAT Help on:;
Complaining to HMRC – VAT;
If you wish to complain to HMRC regarding your VAT view – COMPLAIN ABOUT HMRC;


You’ll need your National Insurance number to use web chat.

Speak to an adviser online about:

  • Making Tax Digital for VAT
  • using VAT online services

If you need 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 0808 280 3581 for 100% confidential, free initial, no-obligation advice.
Do not struggle.

If you are unable to pay your VAT. Then consider a

  • Creditors Voluntary Liquidation CVL;
  • 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 in paying any part of HMRC. Therefore, a problem for your company starts. HMRC, however, does not delete missed or late payments. Once extended, however, they will instruct bailiffs if the circumstance remains unpaid.

The HMRC does not instruct bailiffs at the first stage of a late or missed payment. HMRC then issued reminders, along with new fines and interest charges, to promote settlement early. Once started, you should contact HMRC and establish a solution. TAKE: The longer you ignore the problem, the fewer chances you will reach 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, 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. Failure 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 them;

Remember: always quote your VAT registration number when dealing with the VAT office at HMRC.

Contains public sector information licensed under the Open Government Licence v3.0.

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