5 Things You Should Know About Late VAT Payments – What Happens if I Missed the Deadline?

late VAT payment

5 Things You Should Know About Late VAT Payments – What Happens if I Missed the VAT Deadline?

Late payments of VAT to the HMRC have financial consequences. 

The due date to submit and pay VAT returns is one money and 7 days after the end of the VAT quarter. 

You can check your VAT return submission and payment deadline through your HMRC online account

If you miss the VAT deadline, here are five things you should know.

1. You get a warning the first time you default.  

A business has defaulted when the HMRC does not receive the VAT Return or payment by the deadline date

The return needs to be submitted even if sales are zero or you are due to receive a VAT refund.  

If it is the first time the business defaulted within 12 months, HMRC will send a letter reminding you that your VAT obligations are overdue, and you will need to make the required VAT payments, and you will not receive a financial penalty. 

2. Small businesses get an extra break.

If your business's revenue is less than £150,000 a year, you also get a second default in 12 months without suffering a financial surcharge. 

Only on the third default would you receive a Surcharge Liability Notice where your annual revenue is under £150k. 

You can find a find list of the surcharges applied for different business revenue levels here - https://www.gov.uk/vat-returns/surcharges-and-penalties 

3. Defaults can trigger financial penalties.

The surcharge depends on two things: the amount of VAT that is left unpaid, the number of previously missed payments or returns, and the company’s annual turnover.

A surcharge is the word that HMRC use, in relation to VAT,  for “fine” or financial penalty. 

The surcharge (penalty) amount can be up to 15% of the unpaid VAT amount, where there are six defaults. 

A full list of penalty amounts are here https://www.gov.uk/vat-returns/surcharges-and-penalties 

late vat payments

4. HMRC looks into a “reasonable excuse”.

Companies with a reasonable excuse for failing to meet their VAT obligations and have tried to amend this without delay are not always liable to surcharges.

HMRC will look at a “reasonable excuse” for late payment and filing, although there is no legal definition of what such an excuse is.  It will be assessed on a case to case basis.

5. You can make arrangements to pay the money owed in chunks.

HMRC has the option to provide a Time to Pay arrangement to businesses who are struggling with their VAT payments.

You can settle your tax obligations through monthly payments rather than pay the entire amount at the same time. This must be done by speaking to HMRC and arranging a payment plan. 

Typically HMRC will give you anything from 3 months to 12 months to settle your VAT debt. 

You have to keep current with your ongoing VAT payments in a payment plan; otherwise, HMRC can cancel the payment plan and make all overdue VAT payable immediately. 

You might also want to read:

How do I pay VAT
When is my VAT return due?


I'm Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.