HM Revenue & Customs in the UK have announced new rules, to discourage taxpayers from paying VAT bills by cheque.
From 1 April 2010, most UK VAT-registered businesses must submit their VAT returns online and pay their liabilities by electronic means. This will apply to all traders with turnover over £100,000, and all newly-registered businesses
Other traders will still have the option of paying by cheque. However also, from 1 April, HMRC will treat all cheques received by post as being received on the date when funds are cleared and reach HMRC’s bank account. If the cheque doesn’t clear by the deadline, a surcharge for late payment may arise.
As cheques can take several working days to clear, this is a serious disincentive to taxpayers to pay by cheque, unless of course they (and their accountants) are sufficiently organised to complete their VAT returns well before the deadline.
We can be certain about two things in relation to this news:
- It isn’t an April Fools joke.
- It won’t be long until the Revenue Commissioners in Ireland follow suit.
The days of paying tax bills by cheque are numbered…