What should I do if I cannot pay the HMRC VAT bill on time?
Failure to pay your VAT bill on time is a serious matter. HMRC will record a default on your account and charge you interest on the amount you owe.
If you know you are going to struggle to pay your VAT bill on time, you should contact HMRC as a matter of urgency and make them aware of the situation. HMRC have a dedicated Business Payment Support Service which has been set up to deal with exactly these types of issues. Depending on your company’s circumstances, you may be able to negotiate a time to pay (TTP) arrangement. As the name suggests this gives your company additional time to pay what it owes through a series of monthly repayments. Be aware however, that HMRC will not automatically agree to a TTP arrangement. You will need to be able to prove that your company is in a position to pay the amount it owes and is a viable prospect going forwards.
Being unable to pay your VAT bill on time could be an indicator that your business is heading towards insolvency. If you feel this could be the case, you need to make it a priority to contact your accountant to discuss the situation in more depth.