As a business, if you can’t pay your VAT bill there can be serious consequences. Setting up VAT payments is one task that needs to be taken care of, otherwise your business may face legal action.
What is VAT?
VAT or Value Added Tax is a form of consumption tax. It is a tax that is placed on spending on goods and services. In places like America there is no VAT placed on products simply because there is another kind of tax used. They have a sales-tax which differs from state to state.
VAT in the UK needs to be paid to the HMRC (Her Majesty’s Revenue & Customs). As a business, if you’re selling any products or services to anyone then you must be registered for VAT. It is something that you should be charging your customers on top of what they are already paying.
What happens if you don’t pay?
There are legal ramifications for business that don’t pay VAT. The first step that will be taken against is you will initially be sent a written demand for payment and failure to adhere to this letter will then result in a bailiff or customs officer coming to your business or home. This is known as distress action.
Next you may receive a county court summons. If this goes against you there are a number of things that could happen. The first being that you won’t be able to obtain credit, so if you were trying to get a mortgage for a house in future you may be refused it. You may have a legal charge placed on your property or even worse you may have your goods and assets sold so that you can afford to pay off what you owe.
The HMRC are in charge of making sure that all taxes in the country are paid on time and in full. There is a dedicated section on their website which you can view here if you are struggling to meet any payments as far as VAT is concerned with details on what could happen if you don’t pay your VAT bills here.