For most businesses, VAT returns have to be completed and submitted together with electronic payment after 1 April 2010. Existing VAT registered businesses with turnover less than £100k can continue to submit paper returns, and can still pay by cheque. However, HMRC are going to make this a touch more difficult, as they now insist that payment must be received and cleared to their bank by the due date for the return. This can take up to a week, or longer, depending on the quality of the postal service.
Penalties WILL be imposed for payments that are cleared late. No longer can you simply post the return the day before and get a Certificate of Posting. Returns will have to be sent at least a week before the due date and although it might not help, I recommend that you still get a Certificate of Posting. [Or even send it recorded delivery, so that you can tell what date it was received by them.]
I find this new measure somewhat petty, if not draconian. Clearly, they want everyone to pay electronically but if you are at the mercy of the Post Office there is going to be little comeback if the letter takes three or four days to reach HMRC. Even then, it could take a couple of days to be processed before hitting the banking system.