What to do if you cannot pay the VAT you owe

VAT is a tax you have collected on behalf of HMRC – it is not your money to spend. Therefore, if you using the VAT to keep your business afloat, it is worth reconsidering whether your business is worth continuing.

There is guidance on what to do if you cannot pay your VAT on the HMRC website at http://www.hmrc.gov.uk/vat/managing/payments/problems.htm

If this is the first time you have had difficulties paying VAT, you can contact HMRC’s Business Payment Support line on 0845 302 1435.

If you miss a submission or payment deadline, HMRC can fine you a percentage of the VAT owed. The more deadlines you miss the greater the fine (surcharge) will be. If HMRC agree you have a ‘reasonable excuse’ (i.e. significant ill health problems) for submitting your return or paying your VAT late you will not have to pay a surcharge. Seehttp://www.hmrc.gov.uk/vat/managing/problems/penalties.htm for details.

Full information about the action HMRC can take to reclaim money owed to them can be found here: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000168&propertyType=document.