HMRC can invoke Schedule 11 of the VAT Act 1994 which compels the company to make an advance VAT payment of either four to six months of estimated VAT which will be held as a bond for up to a year.
A business that receives a Notice of Requirement for securities at risk or VAT bond request is legally obliged to comply.
Failure to do so will leave directors personally and potentially criminally liable for non-payment.
There will also be an additional fine and a penalty for every VAT rateable sale the business makes so ignoring it would be an expensive mistake.
If you pay the bond and keep up the regular VAT payments for the rest of the tax period then you’ll get the bond back at the end of the tax year.
It’s important to keep open communications with HMRC whether you’ve received a bond request or feel you might struggle to pay your next tax payment.
Another smart move would be to get in touch with us.
We can advise you on strategies to cope if the heavens open at the same time your profits begin to dry up.
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