What happens if my VAT Return is late?

What happens when my vat return is late

What happens if my VAT Return is late?

For most businesses, you will (if you are VAT registered) need to submit a VAT return every 3 months. HMRC allocate your VAT quarters so you will have to look at your VAT registration certificate to determine which quarters you have been allocated. You can find out how to do that here - https://www.annetteandco.co.uk/when-is-my-vat-return-due/

The VAT return is then used to determine how much VAT you owe the government or what your VAT refund from HMRC will be. Needless to say, VAT return submissions are incredibly important.

Submitting your return

A VAT return is simple enough to fill out and must be done online.

The deadline for submission is one month and 7 days after the end of your VAT quarter, and if you are not sure, your VAT online account lists return and deadline information.

This information is detailed and includes when your VAT return is due and when the payment must be cleared through the bank account of HMRC. Now, this may all sound easy enough but let’s be honest: life happens.

Running a business is no easy task, especially if you have responsibilities outside of work like most of us, and it can sometimes affect our ability to get every task done on time. However, if you forget, or are unable, to submit your VAT return on time, and it ends up that your VAT return is late, then, particularly if it is the first time, you shouldn’t panic yet.

However, if you are habitually late, there could be some serious financial consequences.

If both your VAT return and the full VAT amount (the payment) are not received by HMRC by the deadline date then you can be subject to both a surcharge period and penalty fees.

VAT Return is late

Surcharges of VAT Return

In order for your VAT to be considered on time - both the return submission and the payment need to be received by HMRC on or before your due date. If either is late you are in “default”.

If HMRC records a “default” due to lack of payment OR timely submission of your VAT return, they may place you under a 12 month “surcharge period.”

This is essentially a probationary period so any subsequent late filings or payments made during this time will result in penalty fees and a lengthened surcharge period. If you default again during this year, the surcharge period will be increased by another 12 months. You will also be forced to pay an extra fee in addition to the VAT you owe.

This fee will be based on your annual turnover. The first time you default within a surcharge period, you will not be charged – so you are allowed one slip up. However, for every time after the first default, you will be subject to the following penalties:

Defaults within 12 months Surcharge if annual turnover is less than £150,000 Surcharge if annual turnover is £150,000 or more

  • 2nd No surcharge 2% (no surcharge if this is less than £400)

  • 3rd 2% (no surcharge if this is less than £400) 5% (no surcharge if this is less than £400)

  • 4th 5% (no surcharge if this is less than £400) 10% or £30 (whichever is more)

  • 5th 10% or £30 (whichever is more) 15% or £30 (whichever is more)

  • 6th or more 15% or £30 (whichever is more) 15% or £30 (whichever is more)

You won’t be subject to a surcharge if your VAT return is late, but you paid your VAT fully in time, are not required to pay any tax or are owed a VAT repayment by the HMRC.

Penalties of a Late VAT Return

The penalties associated with the submission of a late VAT return are as follows:

  • £400 for completing a paper VAT return instead of an online form (unless you were given permission)

  • 30% of an assessment if the HMRC estimate was too low and was not corrected by you

  • 100% of tax due for submitting a VAT return with intentional inaccuracies

  • While submitting a late VAT return is easy to do, it could end up costing you.


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.