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HMRC internal manual

VAT Payments on Account Regime

Failure to make POA payments and amounts on VISION

Balancing payments and returns

The POA team (see VPOA1500) may notify Large Business Unit (LBU) within Debt Management of debts relating to underpayment of the VAT return. Such debts may be due to the failure to make interim POA instalments during the quarter and/or failure to make a balancing payment in full.

POA instalments

POA instalments are payments of tax. If a business fails to pay its instalments, POA team may send notification of the debt to the LBU requesting that they start normal recovery action.

When the LBU receive notification of the debt, it is possible that they will be unable to see any debt on VISION. This is due the way VISION operates.

POA instalments, when received, credit a business’s account. When the VAT return is received, the POA instalments and any balancing payment received are allocated to it. This means that even where VISION shows a nil or credit balance, the business may be in debt and the LBU should take recovery action on the basis of the POA team notification.

Example 8

A business is in the POA regime and has POA instalments of £100,000 per month. On 15 April 2017 POA team inform LBU that the business is in debt by £200,000, as POA instalments were due and not received on the 28 February 2017 and 31 March 2017. When LBU receive notification of the debt the ledger may look as follows:

Date Description Debit Credit Balance
         
  Bal BF   £200,000.00 £200,000.00 cr
31/01/17 12/16 Return Rec. £1,000,000.00   £800,000.00 db
31/01/17 Bank Giro Rec.   £800,000.00 £0
15/04/17       £0

In the above example it is possible that the business will submit the 03/17 return and payment in full by the due date. However, LBU recovery action must continue until all the debt is paid. Failure to submit the instalments on time or not at all will result in a default surcharge.

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Receipt of payments

Any payments that come on file after a debt has been notified to LBU might be POA instalments which relate to the forthcoming return. Such payments should not be offset against a debt unless you are certain they are debt payments, rather than advance instalments of the following quarter’s liability. If you are in any doubt, you should contact POA team in order to clarify the position.

Example 9

A business has a debt of £50,000 relating to a previous return. Later, the business pays two POA instalments of £500,000. POA team notify the LBU of the debt of £50,000, but the account looks like it has a net credit of £950,000 as below. The account should have a credit of £1 million relating to two POA instalments. The business still has a debt and recovery action must continue as normal.

Date Description Debit Credit Balance
         
  Bal BF £50,000.00   £50,000.00 db
28/02/17 Bank Giro Rec.   £500,000.00 £450,000.00 cr
31/03/17 Bank Giro Rec.   £500,000.00 £950,000.00 cr