DMBM803620 - Time To Pay: agreeing or rejecting Time To Pay: VAT surcharges
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A customer can avoid the recording of a default and surcharge if they meet all of the conditions below
- they contact us to request Time To Pay (TTP) on or before the due date for payment
- we subsequently agree TTP
- they adhere to the arrangement, and
- HMRC do not need to cancel the arrangement.
Due date for payment
In order for HMRC not to impose the surcharge the customer must contact us before the due date for payment.
In some cases it may take some time to negotiate and agree TTP and TTP may be agreed after the due date for payment. In these cases providing that TTP is eventually agreed and they meet all of the conditions then we will not record a default or impose a surcharge. The date that the customer makes the initial request for TTP is the important date.
Where a TTP request received before the due date is refused then a default will be recorded and a surcharge may become payable. This applies even if a TTP is granted following a later request, if that later request is made after the due date. Once a TTP request has been refused any later request should be considered as a new TTP request rather than an ongoing negotiation.
Customers that don’t pay electronically
The due date for payment is classed as the date advised on the VAT return by which payment is due. This is usually one calendar month after the end of the VAT period. There are some exceptions below.
Electronic payers
Customers who pay electronically have an extra 7 calendar days for payment to reach us. Customers that normally pay electronically will have met the conditions set out in the legislation if they contact us within the extra 7 calendar days. This also applies to customer registered for e-VAT but not to customers required to make payments on account.
A customer can be considered as an electronic payer if they have previously made one or more payment(s) electronically or if they state that they intend to pay by an electronic means e.g. BACS or CHAPS.
To see if previous payments have been made electronically you should check the PD screen on VISION. This screen has a row entitled electronic payment. An entry of 1 in this row denotes an electronic payment and an entry of two - payment by direct debit. E-VAT direct debit cases.
Where a customer is registered for e-Vat and pays by direct debit, payment is taken from them 3 working days following an extra 7 calendar days. Providing these customers contact uson or before the date payment is due to be collected from their account they can be considered as having met the conditions under the legislation.
Updating VISION
As soon as TTP has been agreed you must take action to stop the issue of a default notice and any surcharge. Where, exceptionally, a default notice or surcharge has been issued then you must cancel the default and any surcharge. You must not wait until the arrangement has finished before cancelling the default and surcharge.
TTP agreed before the default/surcharge has been issued
Where TTP has been agreed before a default/surcharge has been issued then you need to process a VAT719 to inhibit surcharge processing for the specific accounting period.
When completing the VAT719 form
- enter the customer’s VAT registration number for each period covered by the inhibit
- enter Action code 3
- enter the period reference for each accounting period that the inhibit will apply to
The form must be approved and keyed as soon as possible to avoid the customer being issued with an automatic surcharge.
TTP agreed after the default/surcharge has been issued
If the surcharge has already been issued use a VAT720 to remove the default and surcharge.
To cancel the Help Letter and Help Letter expiry date enter:
- Help Letter expiry date: 999999
- Default code: 2.
To cancel a 1st Default and SLN expiry date enter:
- SLN expiry date: 999999
- Default code: 2
To cancel a 2nd or subsequent default and surcharge, reverting to the previous SLN expiry date enter:
- SLN expiry date: (12 months from the end of the latest period in default)
- Default code: 2.
For further guidance on completing the VAT 720 see VCP10554.
If a customer contacts you because they have received a surcharge notice despite agreeing a TTP, you should check to see if they met the conditions to avoid being issued with a surcharge notice. If they meet the conditions you must complete a VAT720 to cancel the surcharge. Do not advise to write in to appeal the surcharge notice.
Late returns
We may agree a TTP with a customer before the due date for payment and before they have submitted their return. In a small number of cases the customer may then submit their return late (This content has been withheld because of exemptions in the Freedom of Information Act 2000). In these cases the customer will be considered to be in default. This means that no monetary surcharge will be imposed but the taxpayer will be in default and the Surcharge Liability Notice period will be extended. As a customer cannot enter the surcharge system unless they pay late there is a different process for customers who are already in the surcharge system and those who aren’t.
Return received late (1s t default):
- If a surcharge has not already been issued use a VAT719 to inhibit surcharge processing for the specific accounting period
- If a surcharge has already been issued use a VAT720 to remove the whole default and notify the customer that the surcharge notice has been withdrawn
Return received late (2nd and subsequent default):
- If a surcharge has not already been issued use a VAT719 to inhibit surcharge processing for the specific accounting period. After the main enforcement run has taken place use a VAT719 to lift the inhibit. Once the inhibit has been lifted use a VAT 720 to extend the surcharge liability period and issue a SLNE to the customer
- If a surcharge has already been issued, use a VAT 720 to amend the surcharge period extension only and notify the customer that the surcharge has been withdrawn but the Surcharge period extension remains.
Issuing a SLNE
Where you have to issue a SLNE extension you should complete a SLNE using SEES. Where you issue a manual SLNE you must capture a copy of this in EF.
Where the return remains outstanding you contact the customer to obtain the outstanding return. If the return is still not submitted you should cancel the TTP arrangement and follow the guidance below.
Arrangements that break down or need to be cancelled
Where we need to cancel a TTP arrangement you should follow the guidance at DMBM804200.
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- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)