How and when must a business pay VAT?
How and when must a business pay VAT?

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • How and when must a business pay VAT?
  • VAT returns
  • Making tax digital
  • VAT periods
  • Time limits
  • Events terminating a VAT period
  • Cash accounting
  • Flat-rate accounting

FORTHCOMING CHANGE relating to split payment: At Spring Budget 2017, the government announced a call for evidence on alternate methods for collecting VAT for online businesses to consumer sales. It is proposed that VAT will be deposited with HMRC at the time of purchase (often referred to as 'split payment'). This measure is a further step in tackling the non-payment of VAT by some overseas traders who sell goods online to UK consumers. The call for evidence was launched on 20 March 2017. For more detail, see News Analysis: Finance Bill 2017—key VAT and indirect tax provisions. The government published a response on 1 December 2017 to the call for evidence and issued a further consultation at Spring Statement 2018, which closed on 29 June 2018. For more detail, see News Analysis: Spring Statement 2018—Tax analysis—Alternative method of VAT collection—split payment. A response to the further consultation was published on 7 November 2018. The government will set up an industry working group.

Although VAT is a tax that is ultimately borne by the final consumer, the responsibility for paying VAT to Her Majesty's Revenue & Customs (HMRC) lies with VAT registered suppliers of goods and services. For more details, see below: How is VAT collected?

This Practice Note provides an introduction to the mechanics businesses must use when paying VAT to HMRC.