What does "pay and file" refer to in VAT management?

"Pay and file" refers to a system in VAT management where taxpayers are required to calculate their VAT liabilities, remit the payment, and file their VAT returns by specific deadlines. This approach establishes clear timelines for both the payment of VAT due and the submission of the required documentation, ensuring compliance with tax regulations.

Adherence to this system is crucial for businesses, as it helps prevent penalties and interest charges that may arise from late payments or late filing. This choice accurately reflects the responsibilities that businesses have in managing their VAT obligations within the given timeframes.

The other options do not correctly encapsulate the essence of the "pay and file" system. For instance, the concept of paying and filing after the tax year, as suggested in one of the choices, does not align with the requirements for timely submissions. Additionally, a voluntary scheme for late returns does not align with the mandatory nature of the "pay and file" requirement. Lastly, while deferring payments without penalties sounds appealing, it does not represent the fundamental principle of needing to pay VAT and file returns by specific deadlines.