Vat Return Deadline & Payment Dates

VAT registered companies in the UK are required to submit VAT returns and make VAT payments on time. Failure to meet the VAT deadline can result in fines and interest being charged on the outstanding amount.

 

Vat payment dates & VAT return deadlines

 

As a general rule, the VAT deadline for both returns and payments is 1 calendar month and 7 days after the end of the relevant accounting period. Importantly, the deadline includes the time needed for the payment to clear and reach HMRC.

As an example, for the accounting period January to March, the VAT payment and VAT return will be due by 7th May. The 7th of the month does mean the seventh working day.

Even where there are no transactions to be reported for that VAT period, a ‘nil VAT return’ must be submitted to HMRC.

VAT periods run for three months. This means VAT-registered companies must submit their VAT returns and make VAT payments to HMRC four times each calendar year.

The quarterly VAT period does not always follow the calendar quarter. Companies can choose their quarterly period when registering online for VAT.

If you are unsure of the VAT deadline for your company, you can check your online VAT account. You can also use your account to sign up to receive reminders of the company’s VAT deadline and for confirmation that any VAT payments you make have been received by HMRC.

 

Annual VAT returns

 

Quarterly VAT deadlines do not apply where the company uses the VAT Annual Accounting Scheme.

Under this scheme, annual VAT returns are allowed if taxable turnover is below £1.35 million. Advance VAT payments have to be made towards the VAT bill throughout the year, based on the company’s last return.

After the annual VAT return has been submitted, the company will either have to make a final payment to cover the shortfall from across the year or apply for a refund in respect of the amount overpaid during the 12-month accounting period.

 

Completing your vat return

 

The VAT return should relate to the specific three-month VAT period, accounting for:

 

• VAT deductible that the company has been charged on purchases (‘input tax’)
• VAT payable that the company has been charged on company sales (‘output tax’)
• VAT on credit notes received from company suppliers
• VAT on credit notes issued to customers
• VAT allowable and due on acquisitions
• Any net overclaim of input tax from previous returns
• Any net understatement of output tax on previous returns
• Bad debt relief, where the debt is over six months past the payment due date but less than four years and six months old

Each VAT return should only include transactions that relate to the specific VAT period.

 

How do you make a payment for VAT?

 

VAT is paid to HMRC via electronic payment, such as direct debit, BACS, CHAPS, credit card or online and telephone banking.

Direct debit payments can be set up when registering for VAT on the company’s online VAT account.

If you don’t have a direct debit arrangement in place, you will need to ensure the company’s VAT payments reach HMRC within one calendar month and seven days after the end of the relevant account period. This means making the payment with enough time for the transaction to clear. You should also take account of weekends and bank holidays.

When making payment to HMRC, ensure you use the company’s VAT number as the transaction reference.

 

What happens if I submit my VAT return late?

 

Failure to meet the VAT return deadline and payment dates can result in the company being fined and interest being charged on unpaid or underpaid VAT liability.

 

Penalties for late VAT filing & payment from 1 January 2023

 

HMRC operates a points-based penalty system for late VAT submissions and payments. This includes nil VAT filings and VAT repayment returns.

For each VAT return that is filed late, a company will receive a penalty point. If the company receives a certain number of penalty points, known as the threshold, it will be issued a penalty of £200. The points threshold is determined by the company’s acconting period, as follows:

 

VAT accounting period	VAT penalty points threshold
Annual	2
Quarterly	4
Monthly	5

 

While the company remains at the threshold, it will receive a £200 penalty for each subsequent late VAT submission.

Companies with non-standard accounting periods are subject to the following thresholds:

 

VAT accounting period	VAT penalty points threshold	Rules that apply
Over 20 weeks	2	Annual
Over 8 weeks up to 20 weeks	4	Quarterly
8 weeks or under	5	Monthly

 

Interest is charged on late payment penalties for late payment of VAT and late submission penalties for not submitting a return on time.

Interest is applied from the first day VAT payment is overdue until it is paid in full at a rate of the Bank of England base rate plus 2.5%.

 

VAT returns not affected by late payment or filing

 

Late submission penalties do not apply to a company’s first VAT return if newly- VAT-registered, or to the final VAT return after VAT deregistration, or to one-off returns that cover a period other than a month, quarter or year.

 

Penalties for late filing & payment of VAT for periods prior to December 2022

 

Late VAT filing prior to 2023 was dealt with under the VAT default surcharge system.

The penalty depended on how many times the company has previously defaulted within a 12-month period.

There were no penalties for late filing of the return if the VAT was paid on time, but a warning notice would be issued the first time a return had not been submitted.

If VAT payment was late, the company was sent a “Surcharge Liability Notice”. Should the company default again within a 12-month period, a penalty was issued at 2% of the VAT due. This penalty was increased to 5%, 10% or 15% if the error was repeated, and an extended “Surcharge Liability Notice” was issued.

The surcharges were calculated at a percentage of the unpaid VAT:

 

Annual Turnover	Less than £150,000	£150,000 or more
First default
Second default within 12 months	None	2%*
Third default within 12 months	2%*	5%*
Fourth default within 12 months	5%	The higher of 10% or £30
Fifth default within 12 months	The higher of 10% or £30	The higher of 15% or £30
Sixth or more default within 12 months	The higher of 15% or £30	The higher of 15% or £30
* no surcharge if this is less than £400

 

Companies were not fined for late filing of the VAT return if the full VAT amount due was paid on time, if there was no VAT to pay or if the company was due a VAT rebate.

 

How do you correct an error on your VAT return?

 

Errors in VAT calculations are not uncommon, but they need to be rectified with HMRC. If you fail to disclose a VAT error, the company could face a misdeclaration penalty of 15% of the unpaid VAT. If you notify HMRC voluntarily of the error, the company will not be fined.

If the error (such as an overpayment of VAT) is under £10,000 or, if between £10,000 and £50,000, do not exceed 1% of the company’s quarterly turnover, VAT errors can usually be corrected by adjusting the current return and including the value of the VAT adjustment.

If the net value of the error is between £10,000 and £50,000 and does not exceed 1% of the company’s quarterly turnover, or if the error is greater than £50,000, you would need to submit either a corrective return using form VAT 652 or a Voluntary Disclosure (Error Correction Notice).