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Paper VAT returns on their way out

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Filing VAT returns on paper should be a thing of the past as from 2012.

HM Revenue and Customs (HMRC) announced the phasing out of paper VAT returns earlier in the year.

The phasing begins on 1 April 2010 when every VAT registered firm with an annual turnover of £100,000 or more (exclusive of VAT) will be required to submit their returns online and to pay electronically (by Bacs or Chaps telephone or internet banking).

The same rule will also apply to all businesses that newly register for VAT, irrespective of their turnover.

Other businesses that do not fall into either category will still be able to file paper returns, but, HMRC have said, this will be reviewed in the run up to 2012.

Electronic payments provide firms with a little extra time in which to meet their VAT liabilities, and it is also possible to pay by direct debit, the amount deducted being that which the business declares in its online return.

Another change will be the disappearance of paper reminders to pay VAT; instead firms that are paying online can receive an e-mail reminder.

Businesses are being urged to prepare themselves for the new rules as soon as possible in order to avoid any penalties HMRC may impose if they do not comply.