TaxPersonal Tax23 May 2000 – GET AN EXTRA WEEK TO PAY YOUR VAT

23 May 2000 - GET AN EXTRA WEEK TO PAY YOUR VAT

Businesses paying their VAT electronically from 31 May can improve their cash flow because they will have an extra week to submit and pay their VAT returns.

Announcing the new electronic payment concession Paymaster General Dawn Primarolo said:

“Electronic payment means businesses improve their cash flow because they can time payment precisely, thus aiding their financial planning. There is greater certainty that payments are made on time, reducing possible liability to penalties, and credit transfer is a more secure method of payment.

“This is part of the wider Government drive to develop electronic services, for both businesses and the public. Customs are also trialing the introduction of electronic filing of VAT returns in order that all businesses can do this from early in 2001. Businesses can already retrieve a wide amount of VAT guidance from the website 24 hours a day. We are delivering a tax system to meet the current and future needs of business.”

NOTES FOR EDITORS

1. For VAT returns with a due date on or after 31 May 2000 use of electronic means of payment will be made simpler. Qualifying businesses will automatically receive the seven calendar day extension for the submission and payment of VAT returns, on a return by return basis. Businesses will no longer have to request this concession and, as the extension will be applied automatically, they will not be advised whether or not they have been given it.

2. The small number of businesses in the Payment on Account and Annual Accounting schemes cannot use this concession. Virtually all businesses in the Payment on Account scheme pay VAT electronically, and those in the Annual Accounting Scheme already get extra time to pay their VAT.

3. The automatic application of the concession on a return-by-return basis gives businesses the freedom to change payment methods without having to notify Customs. However if a business changes back to paying by cheque it will not have the extra week to make that payment.

3. If the VAT return and electronic payment are not received on or before the seventh calendar day following the normal due date, businesses may be liable to default surcharge, the penalty regime for late payment.

4. Any VAT liabilities can be paid by an electronic method; however, the 7 extra calendar days apply only to VAT return payments and not to other VAT payments such as assessments or underdeclarations.

Businesses can obtain further details on this concession from their local VAT Office listed under Customs and Excise in the telephone book and from Customs’ Internet site – http://www.hmce.gov.uk

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