Payment of VAT – are you helping your cash flow?
23/11/2009
No-one can avoid paying their quarterly VAT liability, but careful choice of payment method can benefit your cash flow by ensuring the funds are in your bank account for longer.
The normal due date for VAT payments is one month after the end of the quarter to which the payment relates. If however, you use an electronic payment method such as BACS, you will receive a seven day extension to this time limit. This can be further extended if you make online returns and pay by direct debit as HMRC will automatically collect payment on the third banking day after the seven extra calendar days have elapsed.
Full details of how to set up the different payment methods can be found on HMRCs website at www.hmrc.gov.uk/payinghmrc/vat.htm.