A large number of us still rely on cheques but are you aware that the cheque guarantee card scheme is about to be phased out?

According to research from WorldPay, 42% of UK small businesses and start-ups use cheques for day-to-day payments and 76% of them did not realise that as from June this year the cheque guarantee card scheme will be phased out. In fact talks are under way to phase out cheques completely by 2018, a fact that 45% of small enterprises were unaware of.

62% of businesses have not yet planned how they will make payments when cheques disappear and 29% expect to continue writing cheques for the next few years.

Businesses were asked about the potential advantages of accepting card payments instead of cheques and 61% said transaction times were faster and they would save time and money by not having to manually bank cheques. 32% of business owners said a major motivation to replacing cheque payments with cards was increased safety.

Meanwhile, the Treasury Select Committee is reopening an inquiry into phasing out cheques after MPs claim to have been inundated with letters from members of the general public who routinely use them.

In 1990, around 11 million cheques were written every day. By 2009 that figure had dropped to 4 million. However, many older people are reluctant to use online banking and still write cheques to cover monthly bills.

Age UK says it is unacceptable to scrap cheques without finding a suitable replacement. People who are unable to leave the house rely on cheques as a safe and secure method of settling their liabilities. If that option is taken away, vulnerable older people might have to give their cash card and PIN to other others, which is against all the advice given by banks.

The inquiry will remain open until May 6th and written evidence can be submitted to the Treasury Committee, at 7 Millbank, House of Commons, London SW1P 3JA.

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Contractor accountants and small business owners should be aware that paper VAT returns due at the end of April, need to be filed early.

Paper VAT returns are generally filed on the final working day of a month. But this year, the 30th of April falls on a Saturday and on the 29th we have a bank holiday to celebrate the wedding of Prince William to Kate Middleton.

HMRC has warned that cheque payments must also be cleared to the Revenue’s bank account by the 28th and reminds people that a cheque must be banked three days in advance if it is to get through the clearing system in time.

As from April 2012, virtually all UK businesses that are VAT registered will be required to file their returns online and make their payments electronically. HMRC has urged firms that still file paper returns to prepare for the change and register for online filing well in advance of the switch.

Businesses that are concerned about electronic filing would be best advised to look to their accountant for help and advice.

Meanwhile, HMRC is looking into ways to speed up the process for dealing with new VAT registrations. The Revenue currently has a target of processing 70% of applications within ten days. In January this year, HMRC beat this target and checked 79.9% of all applications within the timeframe. However, the government department concedes that it takes longer than it should to conduct in-depth checks.

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The deadline for online VAT returns is drawing close. As from April 1st this year, it becomes mandatory to file online.

Businesses that do not comply with the new online regulations will face a fine from HMRC.

The Federation of Private Businesses believes there are many benefits to using the online service. These include 24/7 access and an instant acknowledgement of receipt. An initial online error check is performed; businesses can obtain a seven-day return and extension and use the system to nominate an agent or online accountant.

The only disadvantage, according to many contractor accountants, is that direct payment must be made electronically through the BACS system, CHAPS, Bank Giro and internet or telephone banking.

Another change that comes into effect on April 1st this year concerns the receipt of cheques. If paying VAT by cheque, the payment is classed as made when the cheque clears as opposed to when it was received.

Businesses are strongly advised to urgently review their VAT procedures, including contractors using the Flat Rate VAT Scheme, to ensure they comply with the new regulations.

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