VAT Payments By Cheque To Change On April 1st
Contractors working through their own limited company should be aware that from April 1st, 2010 all cheque payments for VAT, sent to HMRC by post will be treated as being received by HM Revenue and Customs on the date when cleared funds reach their bank account. It will no longer be the date when HMRC receives the cheque.
The purpose of the change is to encourage compliance and highlights the benefits of paying their VAT electronically. It also removes the cash flow advantage businesses can benefit from by paying by cheque.
If paying by cheque, all businesses, including contractors with their own limited company, must allow enough time for their payment to arrive and to clear into the bank account no later than the due date shown on their VAT return. A cheque takes three bank working days to clear so it is important to be aware of this change to ensure you do not pay your VAT return late which could result in a surcharge.
HMRC advise that you should allow at least three working days for a cheque payment to reach them and a further three working days for the payment to clear into their bank account. This means if you were to pay your VAT return by cheque, send it off no later than one week before the due date.
Alternatively, a VAT return can be filed online and paid electronically. HMRC recommends that contractors with their own limited company make their VAT payments electronically as this is safe and secure. In most cases it also gives up to seven extra calendar days to pay or, if paying by Direct Debit, at least ten extra calendar days.
From April 1 2010 businesses with an annual turnover of £100,000 or more (exclusive of VAT) and all newly registered businesses must file their VAT returns online and pay any VAT due electronically.
Independent Contractor Services offers a Limited Company Service which aims to help you with setting up your own limited company. We also offer a free IR35 review and can give you accountancy support and expenses guidance at your request.
Filed under: Contractor News
