HMRC issues guidance on VAT electronic payments

HMRC has issued guidance about paying VAT to HMRC electronically, and receiving repayments by Bacs, as well as updates to the land and property, education, and construction VAT manuals

HMRC says payments of VAT refunds by Bacs are faster, safer and more secure than payable orders which can take up to six days to clear and will be phased out in the future.

To receive repayments straight into a bank account, companies and individuals need to provide details of their bank sort code and account number through the VAT online service. The account must be in the name of the registered person or company, and all future repayments will be made direct to that account unless HMRC is advised of a change.

The request must be signed by the appropriate person. For an incorporated company, this is a director or company secretary; Limited Liability Partnership (LLP) - a registered member; partnership - one of the listed partners; sole proprietor - the sole owner of the business; and non-profit making body - chairperson, treasurer, trustee or secretary.

If companies or individuals have already provided bank details to set up a direct debit, these details are not available to HMRC to be used for repayments, so a separate request is required. Requests must include the VAT registration number and the relevant period end date.

As well as Bacs, HMRC is encouraging the payment of VAT electronically by other methods, such as direct debit; online or telephone banking; and debit or credit card online. In comparison to electronic methods, HMRC says cheques are less secure, more susceptible to fraud, slower and more expensive to the process.

The guidance also notifies updates to three sector-specific VAT manuals. VAT land and property VATLP24750 provides further examples of supplies between landlords and tenants and whether these activities create a provision of finance for the purposes of the option to tax anti-avoidance legislation. VATLP23500 adds in circularity guidance to assist business in relation to the option to tax anti-avoidance legislation.

VAT education manual VATEDU53400 provides further guidance on closely related goods in relation to services following the case of Brockenhurst College C-699/15.

VAT construction manuals VCONST15250 and VCONST15610 provide further guidance on what is considered to be a care home and the differences between a care home and a hospital following the case of Pennine Care NHS Trust TC04998.

Guidance VAT Notes 2017 Issue 3 is here.

HMRC VAT manuals list is here.

Report by Pat Sweet

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