If you are registered for VAT you need to make sure you complete your VAT returns on time, otherwise, the penalties could add up quickly.
What are the deadlines for VAT?
With the exception of those on the annual accounting scheme for VAT, everyone needs to complete a VAT return every three months (or quarter). The deadline to do so is one month and seven days from the end of the quarter and the return must be submitted online. Payment of any VAT is due on the same date. It should be noted that the money should reach HMRC by the deadline, so make sure you leave time for payments to clear.
With the annual accounting scheme for VAT, the VAT return is due by two months after the twelve-month period. Payments are spread throughout the year either monthly or quarterly. You can find more information regarding the differences of the annual accounting scheme in our blog dedicated to it.
What happens if I miss the deadline?
Missing the deadline for either filing your VAT return or paying any VAT is known as defaulting. Defaulting on a VAT return puts you into a state known as a “surcharge period” for twelve months.
If you default again on your VAT return during the surcharge period you will be charged an extra amount on top of your VAT known as a “surcharge”. The surcharge period is also extended for another twelve months, meaning you will have a longer period where you are liable to pay more surcharges on late VAT returns.
The amount you pay depends on the VAT due and increases the more you default up to six times. Any additional defaults will be the same amount as the sixth. The amount varies between 2% and 15% (or £30 if this is higher).
More information on the penalties can be found by clicking this link.
Exceptions to the above
You can avoid a surcharge period for submitting a late VAT return if:
- You pay the VAT due within the deadline.
- There is no VAT to pay.
- You are due a VAT repayment
However, we would advise trying to submit all VAT returns on time to help avoid defaulting on a VAT return that puts you into the surcharge period.
Additional penalties
There are additional penalties to the ones above as shown below:
- You can be charged up to 100% of any tax that has been under-stated (or over-claimed for a repayment) if due to a deliberate or careless mistake.
- Sometimes HMRC will send you a notice with an estimation of VAT due based on earlier VAT returns. If this estimation is too low and you do not correct them within thirty days you can be charged 30% of the estimated amount.
- If you submit a VAT return on paper instead of online you will be charged £400.
If you require any more information regarding the above or would like advice on VAT in general, please do not hesitate to contact us.
