Last week, HM Revenue & Customs (HMRC) published VAT Notes 2018 Issue 3, a guidance note containing important VAT-related updates and information.
The newsletter included some comments in respect of VAT repayments sent via Bacs.
The Revenue confirmed that it is now able to send payments straight to taxpayers’ bank accounts in instances where the taxpayer is due a VAT repayment.
However, the note contains two pieces of information which do not perhaps immediately jump out at the reader – but could be of great importance. The first is that – if a business has already given its bank details to set up a ‘Direct Debit’ – these details will not be available to HMRC to make repayments. In other words, the section of HMRC which sets up the Direct Debits will not share the information with the section that deals with repayments.
The second piece of information that doesn’t immediately jump out is buried in HMRC’s comments that Bacs is safer and more secure than the alternative method of payable order which takes 6 days to clear. The buried piece of information is that the payable order method of repayment will be phased out in the future.
In order to set up Bacs repayments, the taxpayer must:
- Provide HMRC with details of their bank account number and sort code using the VAT online service.
- Ensure that the account details given match the name of the registered person or company.
HMRC say that once a taxpayer has provided HMRC with the relevant bank details, the tax authority will continue to make all future repayments into that account unless it is informed otherwise.
Julian Borley, Director of VAT at Milsted Langdon, said: “Taxpayers and businesses alike need to take note of HMRC’s intention to phase out payable orders.
“They do not state when this will happen but it is advisable to set up Bacs repayments with HMRC sooner rather than later.”
For more information about how Milsted Langdon can help, please contact Julian by emailing email@example.com or calling 0117 945 2500.