Starting a new business? Get 40% off our accountancy services for 3 months! 😎

x

Under the rules for Making Tax Digital for VAT, VAT registered businesses must keep their financial records digitally and submit returns using HMRC-approved software. In this article we explain what happens if a VAT return is late or if the rules aren’t followed correctly.
 

What is the penalty for submitting my VAT return late?

Will I be fined if I’m late paying my VAT bill?

Penalties if you do not comply with MTD rules for VAT

HMRC use a points-based system to work out VAT return penalties, with each overdue submission accruing one penalty point each. If you receive enough points to reach the penalty threshold, you’ll be charged a £200 penalty.

VAT penalty points have a 2-year lifetime before they expire.

 
Although this means a late VAT submission might not result in an automatic penalty, it’s still important to comply with your VAT return deadline!

What is the points threshold for receiving a VAT submission penalty?

The points threshold varies depending on how often you’re required to make submissions (which can depend on which VAT accounting scheme you are on).
 

How often do you make a VAT submission? How many points you will receive before reaching the penalty threshold
Annually 2 points
Quarterly 4 points
Monthly 5 points

The short answer is yes, HMRC will fine taxpayers who don’t pay their VAT bill on time as well as issuing penalties for not meeting the submission deadline. The penalty amount you’ll be charged is based on how many days overdue you are paying your VAT bill.
 

How many days after the due date you pay your VAT bill The penalty charge
0 – 15 days You will not receive a penalty
16 – 29 days 2% of the amount outstanding
30 days 2% of the tax outstanding at day 15, plus
2% of the tax outstanding at day 30
31 days or more 4 % of the amount owed, calculated daily until you pay the amount you owe

What if I can’t pay my VAT bill on time?

Whilst you won’t receive a penalty for the first 15 days after the payment deadline, it’s never a good idea to have a history of late payments on your account. Rather than risking non-compliance, contact HMRC’s Payment Support Service to make a ‘Time to Pay’ arrangement.

The Time to Pay scheme allows you to agree an instalment plan with HMRC, taking into account other bills and spending you need to consider each month.

Keeping digital VAT records and submitting your VAT return using approved software is mandatory under Making Tax Digital (MTD) VAT, so you may receive a fine from HMRC if you don’t follow the rules.

 
Learn more about our online accounting services for VAT, contact the team for a chat on 020 3355 4047, or get an instant online quote.

About The Author

Dean Salmon

I'm an AAT and ACA qualified Chartered Accountant with over 13 years experience working with businesses, contractors and sole traders. I also love watching live music, and quizzes! Learn more about Dean.

More posts by this author
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments

Read more posts...

What is a Non-Established Taxable Person for VAT?

There are special VAT rules in place for online sellers who are classed as non-established taxable persons (NETPs), and use an online…

Read More

The Accountancy Partnership – Our Positive Reviews

Here at The Accountancy Partnership, we’re proud of our customer reviews The reviews we receive from our customers show how hard we…

Read More

What Type of Legal Structure Should I Choose When I Start a Business?

The structure that you choose when you start a business affects how the business operates, the amount of tax you pay, how…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.

Bookkeeping

You will receive our bookkeeping software Pandle for free, as part of your package.

You can use this to complete your own bookkeeping, or we can provide a quote to complete your bookkeeping for you.

Please select and option below:

I will do my own bookkeeping
I want you to do my bookkeeping

Call us on 020 3355 4047 if you’re not sure.