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HMRC have promised to operate with a 'sympathetic view' of their new cheque-handling policy. The pledge follows criticism by tax professionals of the Revenue's announcement that cheque payments must clear the department’s bank account by the due date of return.
Independent VAT consultant Neil Warren said the new measure will 'create an unnecessary risk of default surcharges for VAT quarters ending 31 March 2010, 30 April 2010 and 31 May 2010, namely the periods before electronic payment becomes compulsory for most businesses’.
In response to concerns from tax advisers, HMRC said they would take a light touch in under some circumstances.
'We realise that paper filers who send in their cheques with the return in the post may need a little time to adjust to the new approach, so we will be taking a sympathetic view in respect of these customers for paper returns covering accounting periods beginning before 1 April 2010,' said a Revenue spokesman.
'We will exercise our discretion not to record a default for these returns where the return and accompanying cheque are received by the due date, even if cleared funds are received after the due date.
'However, for payments relating to returns covering accounting periods beginning on or after 1 April 2010, the new cleared funds rule will be firmly applied, said the spokesman.
He added that ‘similar “cleared funds” rules already operate for other taxes where electronic payments are required; for example, for large VAT traders on the payments on account scheme and large employers’.
A cleared funds rule will apply to corporation tax payments from 1 April 2011.
