Three steps to simplify and pay VAT online

Small Business Guides

3 min read

Most businesses fill out quarterly VAT forms and pay online using credit cards or bank transfers, but there’s a much better way. Here’s how to make VAT compliance as simple as can be.

Why VAT is a hassle

More than 75 percent of businesses are in a VAT scheme that requires quarterly payments. If you're one of them, then you have to review all your transactions four times a year, calculate what you owe the government, and make a payment. It’s a lot of admin and it can be stressful because missing a payment – even due to an honest mistake – can cost you money.

If you pay VAT late

After submitting a quarterly VAT return, you have 1 month and 7 days to pay what’s owed. If you don’t get your return in on time, or you’re late on your VAT payment, you enter a 12-month surcharge period. Another late return or payment during that period could result in a surcharge from Her Majesty's Revenue & Customs (HMRC). Find out what you’ll be charged.

Three steps to make VAT as painless as possible

You can bypass a lot of the stress and effort associated with VAT by managing it online.

1. Use software to fill out your VAT forms for you.

2. Check the form and submit it online to HMRC.

3. Have VAT payment direct debited from your business bank account.

1. Use software to fill out your VAT forms

Online accounting software can record all your transactions, calculate your VAT, and pre-fill the paperwork for your return.

Link your business bank account up to your accounting software and it will record your sales and expense transactions every day. The software will ask you to reconcile the information – by matching payments to invoices, and categorising expenses – so it’s easy to get VAT-exempt expenses right.

2. Check the form and submit it online to HMRC

Smart accounting software can also help calculate your VAT payment at the end of the period and fill out the nine-box VAT return for you. It takes a lot of work off your plate.

You or your tax advisor can simply check the form before submitting it online, direct to HMRC. See how accounting software can help you manage VAT online.

3. Paying VAT online: not all methods are equal

Most businesses pay VAT online by credit card or bank transfer. These methods are relatively convenient, but they still require you to individually authorise each payment. That’s an added nuisance on top of all your other business bookkeeping – and it’s easily forgotten. Direct debit is less work and drastically reduces the chance of copping a surcharge for late payment.

Best way to pay VAT online: direct debit

Business owners can authorise HMRC to withdraw the VAT they owe directly from the business bank account. It really takes a weight off. The business owner doesn’t need to remember the payment deadline anymore. Nor do they have to do anything to make it happen. Everything’s automatic.

Spend less time on tax

It might sound too good to be true, but you can automate a lot of the work around VAT. The technology and services already exist. You can set up software to take care of the bookkeeping gruntowrk, and authorise direct debit to make payment seamless. You really just need to check and authorise the VAT returns before they're submitted. Give automation a go. It'll take a huge burden off, and you'll thank yourself every quarter.