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VAT

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As with income tax, HM Revenue and Customs (HMRC) can take action without a court order and take away stock and equipment at your business premises or, if that fails, at your home address (unless the debt is owed by a limited company).

You will usually have to pay any arrears in full before the next VAT return is due. Penalties will be added to the bill for late payment.

The officer will usually look at your past record of VAT payments before deciding what payments to accept so start paying what you can immediately, no matter how small the amount.

If the arrears are based on an estimated assessment, you must submit an accurate return, which could reduce the bill. Even if you cannot pay, you may avoid a surcharge for not making a return.

If HMRC cannot recover the money owed by taking away your goods, they will usually apply for a bankruptcy order. However, if you cease trading inform HMRC, or apply to deregister if your turnover is less than the deregistration limit shown on the tax sheet. It is then often easier to come to arrangements to pay off arrears by instalments. Phone us for advice.

HM Revenue and Customs will not tolerate businesses continuing to accrue tax arrears without a payment plan and will often commence bankruptcy proceedings even if you have no assets, with a view to stopping you trading altogether.


The Inland Revenue and HM Customs and Excise have now been merged into one organisation, HM Revenue and Customs, (HMRC). This new department still has the same powers as before but can now deal with both income tax arrears and VAT debts.

 

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