VAT Penalties

VAT Penalties (or 'Surcharges' as HMRC call them)

If a business misses the VAT deadline by not making payment or filing its return on time, HMRC records a default and the business enters a 12 month surcharge period. The VAT deadline is usually one month and seven days after the quarter end. 

If it's a first default there are no penalties (or "surcharges"). 

However if the business defaults again during the 12 month surcharge period (by either filing another late return or by making a late payment), then HMRC will extend the surcharge period for a further 12 months and there will be surcharges due. The table below sets out what there surcharges are. The percentages mentioned are by reference to the amount of VAT that is due to HMRC. 

A surcharge is not payable if:

  • The late return is a nil return.
  • The late return occurs when a repayment is owed to the business.
  • The business pays the VAT on time, but the return is submitted late.
  • The business has a “reasonable excuse”.

If no VAT return is submitted, HMRC will estimate the amount of VAT owed and issue a notice for an estimates amount (known as an "assessment").

In order to avoid paying VAT late you may wish to set up a direct debit for VAT here. If you do so please let us know so that we can update our records. 

Link to HMRC guidance on this VAT surcharges and penalties:

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