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VAT – deadlines and penalties

Businesses must ensure that they submit VAT returns and make payments on time; otherwise they may be subject to penalties.

What is the deadline for filing my VAT Return?

The deadline for submitting your VAT return is usually one month and seven days after the end of the VAT period. This includes the time for your payment to reach HMRC so enough time needs to be allowed. If you are using the Annual Accounting Scheme however, your cut off point will be different. 

How can I check the VAT deadlines for my business?

If you’re unsure of your VAT return deadline you can log into your online account, and tick to receive reminders of your VAT due date.  It will also tell you when the payment is received by HMRC. Every VAT registered business must keep a VAT account, and this will help in the completion of your VAT return.

What information do I need to include in my VAT return?

Below is a reproduction of an example of a VAT account.

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

VAT deductible – input tax CommentsVAT payable – output tax Comments
VAT you have been charged on your purchases£ VAT you have charged on your sales£ 
January2,215.23Only include the input VAT that relates to your VAT period. In this example, the VAT period is 1 January to 31 March. 2,780.23Only include the output VAT that relates to your VAT period. In this example, the VAT period is 1 January to 31 March.
February1,626.47 February2,305.81 
March2,792.01 March3,302.45 
 6,633.71  8,388.49 
VAT allowable on acquisitions96.85 VAT due on acquisitions96.85 
Net over claim of input tax from previous returns-125.50 Net understatement of output tax on previous returns719.26 
Bad debt relief96.48Only include VAT on bad debts if the debt is over six months old (from the date the payment was due) and is less than four years and six months old.Annual adjustment:Retail Scheme – Apportionment Scheme 191.69 
Sub total6701.54 Sub total9,296.29 
Less:  Less:  
VAT on credits received from suppliers-27.50Only include the input VAT on credit notes that relate to your VAT period. In this example, the VAT period is 1 January 2018 to 31 March 2018.VAT on credits allowed to customers-23.00Only include the output VAT on credit notes that relate to your VAT period. In this example, the VAT period is 1 January 2018 to 31 March 2018.
Total tax deductible6,674.04 Total tax payable9,273.29 
   Less total tax deductible6,674.04 
   Payable to HMRC2,599.25The due date for the submission of your VAT return and to make any payment due is one month and seven days after the end of the VAT period. In this example, the return must be submitted and payment made by 7 May.

What happens if I am late to file or pay VAT?

If you file your VAT return late or your payment is late then HMRC will record that you are in default.

You may need to pay a surcharge in addition to the VAT which is payable, the amount will depend on the number of times you have defaulted in a twelve month period. However, there will be no surcharge for the first time you default.

The surcharges are a percentage of the unpaid VAT:

Annual TurnoverLess than £150,000£150,000 or more
Second default within 12 monthsNone2%*
Third default within 12 months2%*5%*
Fourth default within 12 months5%The higher of 10% or £30
Fifth default within 12 monthsThe higher of 10% or £30The higher of 15% or £30
Sixth or more default within 12 monthsThe higher of 15% or £30The higher of 15% or £30

* no surcharge if this is less than £400

Also note that interest may be due to HMRC on underpaid VAT.

What are my payment methods?

All payments now need to be made electronically. The primary method is through direct debit, which you can do once you have registered to file your returns through your online account. You must make sure you’ve registered for this method well in advanced of your due date to ensure that it has been set up in time. To explore payment methods, visit the GOV.UK website

Other types of electronic payments must be sent one calendar month and seven days after the end of your account period. 

Although it depends on your method, you will need to submit payment by the 5th of the month, to ensure it reaches HMRC by the 7th. 

What happens if I file a VAT return that is wrong?

Net errors made in previous VAT periods can be corrected on later VAT returns if they are either:

  • £10,000 or less, or
  • £10,000 to £50,000 (but not exceeding 1% of your quarterly turnover)

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

Failure to disclose an error could result in a misdeclaration penalty of 15% of the unpaid VAT.

To notify HMRC of errors, the form VAT652 is used. If you are unsure about whether you are required to disclose errors to HMRC or are unsure about the penalties or interest you may be charged on these errors, you should speak to an accountant.

Are there any exceptions to these rules?

There is no surcharge if you submit a late VAT return if you:

  • pay your VAT in full by the due date
  • have no VAT to pay, or
  • are due a VAT refund.

There is no misdeclaration penalty if you have voluntarily disclosed an error.

Deferring VAT payments due to Covid-19

The government announced earlier in 2020 that Income Tax and VAT payments could be deffered in order to ease the pressure on self-employed workers and businesses. 

  • The over half a million businesses who deferred VAT due in March to June 2020 are to be given the option to spread their payments over the financial year 2021-2022.

  • They will be able to choose to make 11 equal instalments over 2021-22.

  • All businesses which took advantage of the VAT deferral can use the New Payment Scheme.

  • Businesses will need to opt in, but all are eligible.

  • HMRC will put in place an opt-in process in early 2021.

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