VAT Deadlines and Penalties to be aware of for your business.
If you weren’t aware, the deadline for submitting your VAT return for online submissions is usually one full calendar month and 7 days after the end of your VAT accounting period. In order to keep on top of your VAT deadlines, you can visit your online account and tick the box to receive email reminders of your VAT return being due. However, our Client Management Tool will also prompt you by email.
VAT Deadlines for Payments
You should also be aware that to meet your business VAT Deadlines, all VAT payments must now be made electronically.
Paying your VAT by Direct debit
Once you are registered to file your VAT returns online, you can then also register to pay by direct debit. This method of payment normally gives you an additional three days before any VAT payment due is taken from your bank account and the money will be taken from your account on or around the 10th of the month.
To pay by direct debit > log in online to your VAT account (once you have received your user ID and password) and you will be able to see an option to set up your VAT payments by direct debit.
Please be aware that you need to have set this up well in advance of the VAT Return being due, in order to enable HMRC to set up the direct debit in time to take the payment. We would recommend doing this at least two weeks before filing your return online. Of course, we are happy to provide this service on your behalf.
Please also note that if you submit your VAT return after the due date, then HMRC will collect the direct debit payment on the third working day after the return is received, and this will give rise to a default surcharge issue.
Other VAT payment methods
To see when you will need to make your payment using other electronic payment methods go to https://www.gov.uk/vat-payment-deadlines.
All electronic payments other than direct debits must be with HMRC one calendar month and 7 days after the end of a VAT accounting period. To ensure that your VAT payment reaches the HMRC by the 7th of the month, you will typically need to make the payment by the 5th of the month at the latest, depending on the payment method.
VAT Surcharges and penalties
VAT Surcharges
A late VAT Return or payment is known as a ‘default’.
If your business is turning over less than £150,000, then the first occasion you are late in submitting your VAT Return, you will receive a polite letter reminding you that you are late. If you are late again within 12 months then you’ll get a default surcharge liability notice and then the escalating penalties.
If your business is turning over more than £150,000, on the first time that you are late in submitting a VAT Return, or you are late in paying the tax on your VAT return, a default surcharge liability notice is generated. What this means is that the VAT returns and payments for your business need to be submitted on time for the next 12 months otherwise an increased or escalating penalty takes effect, based on the unpaid tax liability by the due date.
HM Revenue and Customs (HMRC) will write to you explaining any surcharges and what will happen if you default again. The surcharges are a percentage of the tax paid late and the HMRC estimate this if they haven’t received your return – or otherwise known as an assessment.
| Default | Surcharge if turnover is less than £150,000 | Surcharge period |
| 1st | No surcharge but if you default within 12 months you enter a surcharge period | None, but if you miss another VAT deadline within 12 months of the issue of a help letter you will formally enter the surcharge system. |
| 2nd | No surcharge but you enter a surcharge period | 12 months |
| 3rd | 2% (or no surcharge if it’s less than £400) | 12 months from the date of the most recent default |
| 4th | 5% (or no surcharge if it’s less than £400) | 12 months from the date of the most recent default |
| 5th | 10% or £30 (whichever is more) | 12 months from the date of the most recent default |
| 6th or more | 15% or £30 (whichever is more) | 12 months from the date of the most recent default |
| Default | Surcharge if turnover is £150,000 or more | Surcharge period |
| 1st | No surcharge but you enter a surcharge period | 12 months |
| 2nd | 2% (or no surcharge if it’s less than £400) | 12 months from the date of the most recent default |
| 3rd | 5% (or no surcharge if it’s less than £400) | 12 months from the date of the most recent default |
| 4th | 10% or £30 (whichever is more) | 12 months from the date of the most recent default |
| 5th | 15% or £30 (whichever is more) | 12 months from the date of the most recent default |
| 6th or more | 15% or £30 (whichever is more) | 12 months from the date of the most recent default |
There is no surcharge applied if you submit a late VAT Return and you pay the VAT on time, you have no tax to pay or if you’re due a VAT repayment.
VAT Penalties
HMRC can charge you a penalty (between 15% and 100% of the unpaid amount owed) if your VAT Return is inaccurate.
You can download a copy of HMRC’s penalty document at:
https://www.gov.uk/government/publications/compliance-checks-penalties-for-inaccuracies-in-returns-or-documents-ccfs7a
You can be charged a penalty of up to £400 if you submit a paper VAT Return, unless HMRC have told you you’re exempt.
