VAT returns – cheque payments

HMRC has announced an important change to the treatment of cheques sent by taxpayers to pay VAT due on their VAT returns.

From 1 April 2010, payment will be treated as being ‘received’ by HMRC when the cheque clears into HMRC’s bank account and not as currently, the date the cheque is received. A cheque takes three bank working days to clear (excluding weekends and bank holidays).

Businesses paying by cheque must ensure that they allow enough time for the cheque to be received and cleared by the due date of the VAT return. HMRC recommends that businesses should allow at least three days for the post (to allow for any postal delays).

Late payment will lead to surcharge penalties.

Businesses can use alternative means to pay VAT due (eg electronic forms of payment) to avoid such issues with cheques. Online filing and payment is a much more efficient and reliable way to deal with VAT returns. From 1 April 2010, online filing is compulsory for businesses with a turnover above £100,000.