Guests checking into hotel

Problems with VAT Direct Debit Payments

With the holiday season in full flow, it’s very easy to understand how the attention of businesses in the Hospitality sector is rightly focused towards guests, from quick turnarounds on accommodation changeover days to making sure quality and supply of food and beverages meet the ever increasing standards of the UK holiday maker.

Prepping VAT returns is unlikely to be at front of mind and of course you shouldn’t need to worry about the current VAT payment at all as the return has been submitted ‘using an appropriate Making Tax Digital (MTD) compatible software’ - which should surely mean your VAT is paid automatically?!? Right? Wrong!

This week we’ve heard from a number of clients whose Direct Debit (DD) has not been taken for VAT. In one case the client paid by BACS only to find the DD to be subsequently taken - so they have paid twice!

There appears to have been issues with the transfer of DD instructions as the reference is different under the MTD system. This means that in some cases the DD may fail – in other cases it may be delayed.

Unfortunately there isn’t a general answer on how to deal with this – you will need to contact HMRC to find out if the DD has definitely failed (and therefore payment still needs to be made). We advise to call the VAT helpline as early as possible in the day as it gets very busy. We would not expect any penalties in these situations and our VAT team has spoken to HMRC; they have indicated they expect the issues with the system to be fixed by 22nd July.

Please check that your Direct Debit has been paid correctly and should you require any assistance or advice with regard to the complexities of the VAT system, please do not hesitate to contact myself or one of our VAT team.

For more information, please contact Nick Heaney on 07599534286 or email nick.heaney@armstrongwatson.co.uk. .

Find out more about our tax consultancy services

If you like this article and would like to subscribe to INSPIRED, our FREE monthly newsletter, then please click SUBSCRIBE.

Subscribe