Paying VAT late doesn't spread it. It grows it.

Penalties and interest are charged on top of the VAT you already owe - and you still have to find the full amount. Work out what waiting actually adds, then see it against spreading the bill.

£24,000
Paying 90 days late adds
£2,338
in HMRC penalties and interest - on top of the VAT itself

Either way, the bill still has to be paid

Wait, then settle
£26,338
in one payment, whenever you can find it. Penalties keep running until you do.
Spread it over 6 months
£4,456/mo
HMRC paid on day one. Penalties stop. No lump sum to find.
See my options →

HMRC: first penalty of 3% of the amount outstanding at day 15, plus 3% of what is still outstanding at day 30; second penalty accruing daily at 10% a year from day 31; late-payment interest at Bank of England base rate + 4% from day one. Applies to VAT due on or after 31 May 2025. Finance figures indicative at representative rates - not a quote, not a credit decision, and no lending decision has been made. Rates checked 29 July 2026.

Before you borrow: talk to HMRC too

If you contact HMRC early, you may be able to agree a Time to Pay arrangement - instalments direct with them. It can avoid or reduce penalties, though interest still runs and HMRC will want to see your finances before agreeing. It is not guaranteed, and it is not always the right fit. But it costs nothing to ask, and we would rather you knew.

Finance makes more sense when you need certainty now, do not want HMRC scrutiny of your accounts, need the cash flow flexibility for other commitments, or have already missed the point where Time to Pay is realistic.

Why waiting is not a payment plan

This is the part people miss. Penalties do not replace the VAT - they are added to it. Three months of waiting does not leave you owing less; it leaves you owing more, with the same lump sum still to find and HMRC's collection powers behind it. Spreading the bill deliberately is a decision. Drifting past the deadline is not.

Finneus is a trading name of Bloq Group Limited, registered in England & Wales, company number 15314821. Registered office: 2 Palmer Road, London, SW11 4GJ. We are a business finance company for UK limited companies. We do not lend directly: we arrange finance through our panel of lenders and may receive a commission from the lender, which varies by lender and product - the commission model is confirmed to you before you proceed. Business lending to limited companies is not regulated by the Financial Conduct Authority. ICO registration pending. Contact: hello@finneus.co.uk · 07496 839090. This tool is a guide, not tax advice - check your own position with HMRC or your accountant.