ChatterBank4 mins ago
vat interest penalties
We are a small business which always struggles in the first 3 months of the year. Last year we were a month late paying the VAT. It is the same time of year now and we are 1 month late in paying the VAT again and have been charged 15% interest on the VAT due for just one month. Does this mean Customs & Excise are allowed to charge an interest rate of 180% per annum? It seems an extortionate rate to us. At our quietiest time of year this interest is an awful lot of money and a big chunk out of our net profits. Surely 15% per month can't be right!
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The surcharge is calculated as a percentage of the VAT that is unpaid at the due date.
If you don't send in your return the amount of VAT you owe will be assessed and the surcharge will be calculated as a percentage of that amount.
For the first late payment during a surcharge period the surcharge will be 2% of the tax outstanding at the due date.
The rate of surcharge will then increase progressively to 5%, 10% and 15% for further payment defaults in a surcharge period.
If you don't send in your return the amount of VAT you owe will be assessed and the surcharge will be calculated as a percentage of that amount.
For the first late payment during a surcharge period the surcharge will be 2% of the tax outstanding at the due date.
The rate of surcharge will then increase progressively to 5%, 10% and 15% for further payment defaults in a surcharge period.
Sorry, I don't know the answer to the interest rate question but would it be worth considering another method of paying your vat? They do have several methods now for small businesses, one I think is where the payments are averaged over the 12 month period which would maybe help to even out your cashflow problems.
I do sympathise with you, its a bit of a nightmare sometimes with vat. We should really be compensated for collecting the government's taxes for them, but don't get me started on that one!
I do sympathise with you, its a bit of a nightmare sometimes with vat. We should really be compensated for collecting the government's taxes for them, but don't get me started on that one!
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