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HMRC launches VAT payment scheme but withdraws self-assessment and VAT registration support helplines

| Duncan & Toplis | 5 July 2023

HMRC is introducing a new VAT payment support scheme for businesses and self-employed people which could help thousands of cash-strapped companies across the country this summer.

With three tax payment deadlines fast approaching - 31 July for self-assessment claims and 7 July and 7 August for May and June’s respective VAT payments - self-employed individuals, VAT-registered business owners, and smaller unincorporated businesses are urged to take note.

The changes come as HMRC moves towards self-serve processes that will drastically reduce the time businesses spend in contact with HMRC, led by the closure of both the self-assessment tax helpline for the summer and the VAT registration helpline permanently.

However, it does offer some good news: payment plans are now available for those businesses and individuals who are not able to pay their outstanding VAT bill in full.

HMRC temporarily suspends self-assessment helpline

With the VAT registration helpline disconnected as of 22nd May and the self-assessment support having followed suit on 12 June, many businesses and self-employed people may feel like they have lost a lifeline for help with their applications or for advice when they reach an impasse.

However, despite the alarmingly short notice, HMRC insists that the closure of the popular support sources will have a positive impact on self-assessment claims being processed.

The planned hiatus will last for the duration of the summer and follows a successful trial by HMRC during 2022. It is hoped that the process will help ensure taxpayer’s affairs are dealt with more quickly than the current average of 40 working days by limiting contact time with staff and allowing them to be re-deployed to more effectively eliminate the backlog.

However, the news is likely to be poorly received by UK business owners who will no doubt have case-specific details that they may be uncomfortable ‘discussing’ with an online chatbot in place of a human representative.

On a positive note, the closure of the self-assessment helpline is only short-term; it is expected to be back up and running on 4 September following the short trial. However, with the 31 July deadline for self-assessment tax returns looming, it may be reinstated too late to help struggling entrepreneurs make sense of any current submission woes.

Permanent closure of the VAT registration helpline

Unlike the self-assessment support line hiatus, the surprise closure of the VAT registration helpline is permanent. This is due to 85% of all calls received being reportedly to check on the progress of existing applications, rather than asking for assistance directly - further adding to the backlog of applications.

Having been given just five day’s notice, the shock move is likely to compound growing frustration at the lengthening delays in processing registrations, which can be especially damaging to businesses as it often results in lost opportunities and lessened income for many due to VAT being an essential element of procurement processes.

Updates on VAT registration applications

With the helpline already defunct, traders who are seeking an update on the progress of their VAT registration application should instead email HMRC’s dedicated VAT registrations inbox rather than calling. If 40 working days have elapsed since submission, you can inquire as to an estimated reply date by using HMRC’s ‘Where’s my reply’ tool.

Can’t pay your VAT bill? Online VAT payment plans are being introduced

The good news for business owners is that HMRC is introducing a new online VAT payment plan, similar to the self-assessment payment plan online. This will enable cash-strapped enterprises to decrease their tax-related debt in instalments and ease the pressure as the cost of living crisis continues to bite.

With inflation falling less than predicted and the Bank of England raising interest rates to 5%, the measure will no doubt be of help to beleaguered business owners across the nation. But what are the specifics - and how can they benefit you?

To be eligible for the online payment plan, you must:

  • Run a VAT-registered business and owe less than £20,000 of VAT
  • Have filed your latest tax return on time
  • Be within 28 days of your next payment deadline
  • Not have any other payment plan in place with HMRC and
  • Intend to pay off your outstanding VAT within a maximum period of six months.

PAYE online payment plan also available from HMRC

If you are a business owner that currently owes outstanding debt for PAYE contributions, you can opt into HMRC’s payment plan scheme if you are able to evidence that you:

  • Owe £15,000 or less
  • Are within 35 days of the payment deadline
  • Plan to pay your debt off within the next six months
  • Do not have any other payment plans or debts with HMRC
  • Do not have outstanding penalties to pay
  • Have submitted any employers’ PAYE submissions and Construction Industry Scheme (CIS) returns that are due

If you do not meet the criteria for the self-serve system, you can still use HMRC’s digital assistant to ask for time to pay.

With tax deadlines looming on all fronts and purchasing power being eroded by climbing interest rates, the payment schemes are expected to offer businesses with limited cash flow reserves a new lifeline during these difficult times.

If you’d like to take advantage of the schemes or are struggling to make sense of your options, get in touch today.


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