If your business’s turnover is greater than £85,000, you must register for VAT.
As a VAT-registered business your responsibilities include charging VAT on goods and services you offer, reporting the amount you charged your customers to HMRC, and paying any VAT you owe.
In this guide, we’ll be explaining all you need to know about paying your VAT, including when the VAT deadline is and what to do if you miss it.
What is VAT?
VAT is a tax charged on certain goods, services and other ‘taxable supplies’ provided by businesses in the UK.
Businesses with a turnover of £85,000+ must register for VAT and submit a return to HM Revenue and Customs (HMRC).
Does My Business Need to Pay VAT?
If your company turns over more than £85,000, you must charge VAT on all of the goods and services offered by your business. You can also reclaim VAT on goods and services purchased by your business.
When is the Deadline for Paying VAT?
Your VAT payment deadline is dependent on your accounting period. Generally, businesses submit their return and pay their VAT on a quarterly basis (every 3 months), however, some opt for the Annual Accounting Scheme.
Certain businesses may even be required to submit and pay their VAT return on a monthly basis if they have frequently missed deadlines in the past.
Quarterly VAT Payments
If your business submits its VAT returns to HMRC on a quarterly basis, you must pay your VAT bill by midnight one calendar month and seven days after the end of the quarter.
For example, if you submit your VAT return for the quarter ending 30th June 2023, the deadline for paying your VAT bill is 7 August 2023.
Annual VAT Payments (Annual Accounting Scheme)
Small businesses sometimes opt for something called the Annual Accounting Scheme. This is a scheme set up to enable small businesses to submit and pay a single VAT return annually rather than the typical four.
The benefits of this include reducing administrative burden and helping with budgeting and cash flow.
The deadline for paying your VAT bill under the Annual Accounting Scheme is two months after the end of their financial year.
This means if your financial year ends on 5 April 2023, the deadline for paying your VAT is 5 June 2023.
Monthly VAT Payments
Sometimes, if a business has failed to make their VAT payments on time on a number of occasions, HMRC may request that they file and pay their VAT on a monthly basis to help them stay on track.
If this is the case for your business, you must pay your VAT within one month and seven days following the end of the period.
Let’s say your period ends on 30th June 2023, the deadline for paying your VAT bill is 7 August 2023, and so on for the following month. However, if you have already struggled to make payments on time in the past, we would recommend making your monthly payments ahead of the deadline to ensure you aren’t at risk of being penalised.
What Happens If You Miss the VAT Payment Deadline?
If you fail to make your VAT payment in full by the deadline, you won’t have to pay a surcharge, however, you will enter a 12 month surcharge period.
During these 12 months, if you default again by making a late payment or failing to pay in full, you may have to pay a surcharge amount on top of the VAT you owe and the surcharge period will be extended for a further 12 months.
See the table below for more information about defaults and surcharges.
| Defaults within 12 months | Surcharge if annual turnover is less than £150,00 | 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 | 15% or £30 (whichever is more) | 15% or £30 (whichever is more) |
Please note: If your accounting period started on or after 1 January 2023, you will get separate penalties for submitting your return late and paying late.
Disqualification from Flat Rate Scheme
If your business is part of the Flat Rate Scheme, one consequence of missing the VAT payment deadline to look out for is disqualification or ineligibility if you plan on joining the Flat Rate Scheme in the next year.
This could result in your business having to pay VAT at the standard rate, which could significantly increase your VAT bill.
HMRC Investigations
HMRC can choose to investigate businesses for a range of VAT issues, including late VAT payments.
Being investigated by HMRC can be a stressful process and is often time-consuming for the business and could lead to additional fines and penalties if there are other VAT issues.
That’s why it’s always best to avoid it by paying your VAT on time.
Concerns for Investors
Missing the VAT deadline could negatively impact the reputation of your business as late payment may be seen as an indication of poor financial management. In turn, this could discourage investors, suppliers and customers from continuing to work with your business.
Get Professional VAT Advice
If you’re unclear on your VAT obligations or need help with your VAT returns, professional advice from an accountant such as Ryans could be the perfect solution.
Our team of VAT experts can help you to rectify the situation and ensure that you are fully compliant with HMRC’s regulations in the future. Get in touch today to find out how we can help you.
Frequently Asked Questions about VAT
What Types of Things are Taxable?
- Sales of goods and/or services
- Hire or loan of your goods
- Commission
- Exchanged e.g. swapping a new product for the exchange of the customer’s old one
- Staff sales e.g. employee meals
- Business goods you use personally
- The sale of business assets
What is Exempt from VAT?
Certain goods and services are exempt from VAT. These include:
- Education and training
- Charitable fundraising
- Selling/letting commercial properties
- Insurance and finance service
- Postage stamps
What is the Current VAT Rate?
| Rate | % of VAT | What the Rate Applies to |
| Standard | 20 | Majority of goods and services |
| Reduced | 5 | Select goods and services e.g. home energy bills and children’s car seats |
| Zero | 0 | Zero-rated goods and services e.g. children’s clothes and most food |