Missing the deadlines for VAT set by HMRC can be a stressful and costly experience for businesses.
Penalties, interest, and potential investigations can put a significant strain on a company’s finances and reputation. However, there are steps that businesses can take to mitigate the consequences of missing the deadline.
In this guide, we’ll discuss what can happen if you submit your return or payment late and what to do if you have missed HMRC’s VAT deadline.
When are the Deadlines for Filing and Paying Your VAT?
The deadline for submitting and paying your VAT depends on your accounting period. Most businesses submit their return on a quarterly basis, while others prefer to use the Annual Accounting Scheme. Some may even submit their return on a monthly basis if they have frequently missed deadlines in the past.
Quarterly
If you submit your VAT returns to HMRC on a quarterly basis, then you must submit your return and pay your bill by midnight one calendar month and seven days after the end of the quarter.
For example, If you are submitting your VAT return for the quarter ending 31 March 2023, the deadline for paying your bill is 7 May 2023.
Annually
Some businesses use the Annual Accounting Scheme, a scheme set up to allow small businesses submit just one VAT return annually as opposed to the normal four, reducing paperwork and helping with budgeting and cash flow.
Businesses that use the Annual Accounting Scheme must make their VAT payments within two months after the end of their financial year.
For example, if your financial year ends on 5 April 2022, the deadline for making your VAT payment is 5 June 2022.
Monthly
If your business has struggled to make its VAT payments in the past, or frequently exceeded the threshold for quarterly payments, HMRC may ask you to file and pay your VAT monthly. In this case, you must make your VAT payment within one month and seven days following the end of the period.
For example, if your period ends on 31st December 2022, the deadline for paying your VAT bill is 7 February 2023.
What Happens if You Miss the VAT Return Deadline?
HMRC recently introduced new rules for 2023 when it comes to late VAT Return submissions.
In the past, those who submitted a late return would have to pay a fault surcharge, however, as of 1 January 2023, there are new penalties in place.
Late Returns for Accounting Periods in 2022
If you missed the deadline for submitting your return for the accounting period starting on or before 31 December 2022, HMRC will send you a ‘VAT notice of assessment tax’, which will tell you how much VAT they think you owe.
You may also have to pay a surcharge and will be entered into a 12 month surcharge period. During this time, 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.
Late Returns for Accounting Periods in 2023
For each late VAT return you send, you will get a penalty point. This even includes nil returns, where you have nothing to declare. Once you reach your penalty point threshold, you’ll receive a £200 penalty. You’ll also receive a further £200 penalty for each subsequent late submission while you’re at the threshold.
What Happens If I Don’t Pay My VAT Before the 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 this time, 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.
| 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
Another potential consequence of missing the VAT deadline is disqualification from the Flat Rate Scheme or ineligibility if you plan on joining it.
If your business is part of the Flat Rate Scheme, you may face disqualification if you miss the VAT deadline. This could mean having to pay VAT at the standard rate, which could increase your VAT bill significantly.
If your business isn’t yet part of the Flat Rate Scheme but plans to join it in the next 12 months, missing the VAT deadline could make your business ineligible.
HMRC Investigations
HMRC has the authority to investigate businesses for a range of VAT issues, including late payment. The investigation process can be stressful and time-consuming for the business and could result in the discovery of other VAT issues. This, in turn, could lead to additional fines and penalties.
Damage to Reputation
Missing the VAT deadline could also harm the reputation of the business. Late payment of VAT can be seen as an indication of poor financial management, which could discourage investors, suppliers and customers from doing business with your company.
How to Avoid Missing the VAT Deadline
Here are a few tips to help you avoid missing the VAT deadline:
Keep Accurate, Up-to-Date Records
It’s essential to keep accurate records of your VAT transactions to ensure that the correct amount is paid on time. Keeping records of sales, purchases, invoices and receipts can help you avoid any errors that could result in late payment.
Use Accounting Software
Using accounting software, such as Quickbooks or Sage, can help simplify the VAT calculation process and ensure that your payments are made on time by providing reminders for upcoming VAT deadlines.
Plan Ahead
It’s essential to plan ahead and set aside enough funds to pay the VAT bill on time. This will avoid the need to scramble for funds last minute and reduce the risk of missing the deadline.
Get Professional Advice
If you’re unsure about your VAT obligations or need help with your VAT returns, it may be wise to seek help from a chartered accountant such as Ryans. We can help you with VAT accounting services to stay on top of your VAT obligations and ensure that payments are made on time.
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How can our experts helpWhat to Do if You Have Missed the Deadline
Notify HMRC
If you have missed the VAT deadline, you should contact HMRC as soon as possible to notify them. This helps to show them that you are taking the matter seriously and are proactive in rectifying the situation. You can notify HMRC by contacting them directly or through your online account.
Submit Your VAT Return
It’s crucial to file your VAT return as soon as possible, even if you have missed the deadline. It’s essential to keep up to date with your obligations to avoid penalties.
Pay the VAT Owed
It’s essential to pay the VAT owed as soon as possible to avoid incurring further interest and penalties. If you’re unable to pay the full amount, you may wish to negotiate a payment plan with HMRC. This will give you time to pay the outstanding amount without incurring additional charges.
Get Professional Advice
If you’re unsure about your VAT obligations or need help with your VAT returns, consider getting professional advice from an accountant such as Ryans. We can help you to rectify the situation and ensure 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 – VAT
What is the VAT filing deadline in the UK?
Typically, VAT returns need to be submitted, and any VAT owed must be paid one month and 7 days after the end of a VAT accounting period. For instance, if your VAT accounting period ends on 31 March, then the VAT return deadline would be 7 May.
What are the VAT periods for 2023?
The standard VAT periods in the UK are usually set quarterly. For 2023, these would typically be:
Q1: 1 January to 31 March
Q2: 1 April to 30 June
Q3: 1 July to 30 September
Q4: 1 October to 31 December
Note: However, some businesses can have different VAT periods based on specific schemes they are part of, or arrangements they’ve made with HMRC.
What happens if my VAT return is late?
If your VAT return is late, HMRC may enter you into its VAT Default Surcharge system. This means that if you default again within 12 months, you could face a surcharge (a percentage of the VAT outstanding on the due date for the return). The percentage increases for subsequent defaults within a 12-month period.
What is the 7-day extension VAT returns?
Some businesses, particularly those in the VAT Annual Accounting Scheme or that make electronic payments, might benefit from a 7-day extension to the usual deadline. This means that they get an additional 7 days on top of the standard one month and 7 days deadline.
Can you submit a VAT return on the 7th?
Yes, if you’re eligible for the 7-day extension, you can submit your VAT return on the 7th day after the usual one month and 7 days deadline.
Is the VAT return quarterly or annual?
Most businesses in the UK submit VAT returns quarterly. However, some businesses might be part of the VAT Annual Accounting Scheme, which allows them to submit returns and make payments annually.
What is the VAT time limit for HMRC?
VAT records should typically be kept for six years. However, if there are any inaccuracies, HMRC can look back up to 20 years to recover any unpaid VAT.