An announcement by HM Revenue and Customs (HMRC), without any prior notice, will cause consternation among cash-strapped business owners and managers.
On 24 February, HMRC announced that as from 1 April VAT will be treated as received the day the payment is cleared by HMRC’s bank. This means that payments for the VAT period to 28 February, normally due at the end of March, will have to be sent earlier than before to avoid the payment being considered as late. The Institute of Chartered Accountants in England and Wales is recommending that VAT cheques are posted at least a week ahead of the due date.
Businesses that pay their VAT by cheque, especially those which use cheques from building society accounts, which can take up to a week to clear, should take note and make sure the payment is in the post in good time.