Readers' forum : Pay as you go

I act for a client who has taken my advice literally and caused himself a big VAT problem. He has serious cash flow problems and asked me what he could do about his VAT liabilities.

I told him to pay what he could afford and then liaise with HMRC on the arrears. However for the past three quarters he has included output tax on his returns only for those sales invoices he could afford to pay. For example he included sales invoices for only July and August 2016 on his September VAT return; sales for September and October on his December return; sales for November to February on his March VAT return. He is not on the cash accounting scheme.

The net underpayment of VAT is now £51 000. How should we deal with this problem to avoid or minimise potential penalties and interest charges?

I look forward...