VAT: All the deadlines and penalties

The deadline for submitting your VAT return and paying any VAT due is usually one calendar month and seven days after the end of your VAT accounting period. This applies to most businesses registered for VAT. Any payment must reach HMRC’s bank account by the deadline, so you should allow sufficient time for your chosen payment method to clear. If you use the Annual Accounting Scheme, different deadlines and payment arrangements apply. 

Use our VAT Calculator to work out how much VAT you’ll pay.

If you’re unsure of your VAT return deadline you can check it by signing into your online account which also allows you to view your VAT obligations, payment history and account balance.

Most VAT-registered businesses must keep digital VAT records and submit VAT Returns using Making Tax Digital (MTD)-compatible software. Maintaining accurate digital records will help you prepare and submit your VAT Returns correctly and on time.

Below is an example of a VAT record that contains the same type of information as MTD software would generate as a digital VAT summary.

Period from: 1 January to 31 March – This is the VAT period to which the example VAT return relates.

If you miss your VAT Return deadline, HMRC will issue a penalty point. Penalty points accumulate each time a return is filed late. Once you reach the penalty threshold for your submission frequency, you’ll receive a £200 penalty. Further late returns may result in additional £200 penalties until you file enough returns on time in order for your points to expire.

The number of penalty points needed before a penalty is charged depends on how often you submit VAT Returns.

Note that HMRC may issue a penalty point even if you have no VAT to pay or are due a VAT repayment if you submit your return late.

HMRC offers a range of payment methods for VAT, including online or telephone banking, CHAPS, Bacs and debit or corporate credit card payments. Direct Debit is one of the most popular options but if you choose this method, you’ll need to set it up before your payment deadline to allow sufficient time for HMRC to process the instruction.

Whatever payment method you use, you must ensure that your payment reaches HMRC by the deadline shown in your VAT account. Processing times vary depending on the payment method, so it’s important to allow enough time for the payment to clear. For more information about payment methods and processing times, visit the GOV.UK website. 

If you do not pay the VAT due by the deadline, HMRC may charge a late payment penalty. The amount charged depends on how long the payment remains outstanding. Generally, no penalty is charged if the VAT is paid within 15 days of the due date, although you may still be charged interest.

If the VAT remains unpaid for longer, penalties increase based on the amount outstanding and the length of the delay. You may be able to avoid penalties by agreeing a payment plan with HMRC before the relevant deadline.

In addition to any penalties, HMRC charges late payment interest on overdue VAT. Interest accrues from the date the payment was due until the outstanding balance is paid in full. The rate of interest is set, and can be changed, by HMRC.

If you discover an error on a previously submitted VAT Return, you may be able to correct it on a later return rather than notifying HMRC separately.

You can usually correct a net VAT error on your next VAT Return if it is:

• £10,000 or less; or
• Between £10,000 and £50,000, provided the net value of the error is no more than 1% of the value entered in Box 6 of the VAT Return for the period in which the error is discovered.

A net error is the difference between the total errors in output VAT and the total errors in input VAT.

Larger errors, or errors that cannot be corrected on a later return, must be reported separately to HMRC using the VAT error correction process.

If an error results in too little VAT being paid, HMRC may charge a penalty depending on the circumstances. The amount charged will depend on factors such as whether the error was careless or deliberate and may be reduced if you tell HMRC about an error before they discover it as well as fully cooperate in correcting it.

If you are unsure whether an error should be corrected on a future VAT Return or reported separately to HMRC, it is advisable to seek professional advice from an accountant or tax adviser.