VAT late filing penalties

VAT late filing penalties

VAT returns are made quarterly in the majority of cases, but there are monthly and annual schemes.

You must file your VAT return online by the end of the month plus 7 calendar days of the period end. For example for a quarter ended in May, you must file your VAT return by the 7th of July.

If paying by cheque you must pay by the VAT return due date but if paying electronically you can also pay any VAT due by the 7th. Again, HMRC do not accept Faster Payments so you must ensure funds clear by then. Furthermore, if paying by direct debit HMRC will collect payment a further 3 working days after the 7th.

There are different rules depending on your turnover. The table below summarises the rules for surcharges where deadlines are not met:

DefaultTurnover below £150,000Turnover above £150,000
FirstNo surchargeNo surcharge
SecondNo surcharge2% of unpaid VAT(unless below £400)
Third2% of unpaid VAT(unless below £400)5% of unpaid VAT (unless below £400)
Fourth5% of unpaid VAT (unless below £400)10% of unpaid VAT
Fifth10% of unpaid VAT15% of unpaid VAT
Sixth and subsequent15% of unpaid VAT15% of unpaid VAT

If you are late with a payment or filing a return, HMRC will initiate a 12 month probation period known as a ‘Surcharge Period’ during which any successive failures will incur the next level of fine as well as resetting the Surcharge Period for another 12 months. The Surcharge Period will come to an end when 12 months of consecutive returns are filed and paid on time.

Surcharges apply if you miss a return or a payment, so even if you pay on time but don’t file the return the surcharges still apply in the same way and vice versa.

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