A Guide to VAT Return Deadlines & Penalties

Keeping on top of countless administrative tasks as a business owner can be daunting and at times feel impossible. However, missing tax and filing deadlines can lead to financial penalties – which is why it's important to be aware of when deadlines are coming up. Staying on top of VAT deadlines allows your company to avoid costly penalties and keeps your business compliant. Therefore, it's crucial to know when your VAT payments are due. However, being informed is the first step to keeping on top of your deadlines!

This article will cover when key VAT deadlines are, the types of penalties you can face for missed deadlines and a few tips on how to stay on time and compliant. 

Key Takeaways

• VAT returns are regular reports that VAT registered businesses submit to HMRC, they show how much VAT you have charged on sales and paid on purchases so HMRC can work out what you owe or can reclaim.
• VAT return deadlines usually fall one month and seven days after the end of your VAT period, whether you file monthly, quarterly or annually, so keeping track of your accounting periods is essential.
• Late VAT returns and late VAT payments can both lead to penalties, HMRC now uses a points based system for late submissions and charges separate penalties and interest for late payments.
• The VAT penalty points system gives you a point each time you miss a filing deadline, once you reach your threshold HMRC issues a £200 fine and further late submissions trigger more penalties until you build up a good compliance record again.
• Late payment penalties are calculated based on how long the VAT remains unpaid, interest is added on top, which means even short delays can become expensive if you regularly miss deadlines.
• You can reduce the risk of VAT return penalties by using Making Tax Digital compatible software, setting calendar reminders, double checking figures before you file and speaking to HMRC quickly if you think you will miss a deadline.

What is a VAT Return?

A VAT return is a regular report submitted to HMRC by VAT-registered businesses, detailing the VAT collected on sales and VAT paid on purchases. The purpose of the report is to determine whether businesses pay the correct amount of VAT or claim the right refunds where applicable.

VAT returns are a legal necessity for all VAT-registered businesses and are typically filed every quarter. The return includes key figures like the total sales and purchases, the amount of VAT owed, and any reclaimable VAT.

It’s essential to submit your VAT returns on time in order to comply with tax regulations and avoid any penalties. By reporting VAT correctly, businesses can ensure they only pay what is due and claim what they are entitled to. 

VAT Return Deadlines 

All VAT-registered businesses must submit their VAT returns according to a set schedule - typically on a monthly or quarterly basis, depending on HMRC’s guidance.

Each VAT period lasts one, three, or twelve months, with the deadline for VAT return submissions falling one month and seven days after the end of each period. For example, if a VAT quarter ends on the 31st of March, the VAT return is due by the 7th of May. Businesses should keep track of VAT quarter dates so they can avoid late filings and penalties.

Businesses on an annual accounting scheme may have specific VAT filing deadlines, including a final return covering the entire fiscal year. It’s essential to check your reporting requirements to avoid late penalties.

Under HMRC’s Making Tax Digital (MTD) rules, all VAT returns must be submitted electronically using software which works with MTD. These returns must be submitted each quarter in order to make the tax system closer to real-time. 

A good tip to help you stay on track with your HMRC VAT payment dates is by setting reminders for submission deadlines. Keep an eye on your VAT quarter dates and work out where your submission will fall, then add a calendar reminder for the day before so you can keep on top of it! Any late filings or missed payments can lead to penalties and can also incur interest charges, so filing on time is essential. 

Types of VAT Penalties

Late Filing Penalties

Businesses that miss VAT return deadlines may face penalties under HMRC’s points-based system. Each late submission accrues a penalty point, and once a business reaches its penalty threshold, a financial penalty is issued. The threshold varies depending on the business’s filing frequency. Points expire after a set period if compliance improves, but persistent late filings can lead to further penalties. This is something you really want to avoid as it makes you seem untrustworthy to clients, partners and investors! 

Late Payment Penalties

Failure to pay VAT on time can result in financial penalties and interest charges. HMRC applies a two-part penalty system: an initial charge based on the overdue amount and additional penalties if the VAT remains unpaid for an extended period. Interest may also be added daily to outstanding balances, increasing the overall amount due.

Incorrect Return Penalties

Submitting inaccurate VAT returns can lead to penalties, particularly if the errors result in underpaid tax. The severity of the penalty depends on whether the mistake was careless, deliberate, or concealed. If you find yourself in this predicament, the best solution is to voluntarily correct your mistake. Businesses that voluntarily correct errors may receive reduced penalties, whereas those that fail to disclose inaccuracies may mean you face higher fines. Being accurate in your VAT returns is crucial to avoiding costly penalties and compliance issues.

How to Avoid Penalties

• Set Reminders and Organise Records – Keeping track of your VAT filing deadlines is essential to avoid late submission penalties. Set your calendar reminders and use digital tools to manage VAT records efficiently. Keeping organised will also help you report more accurately and reduce your administrative time when your VAT deadline arrives. Keep storing invoices, receipts, and tax documents in an organised manner so they’re ready to go every time you file.
• Using Accounting Software – Using VAT-compliant accounting software can help simplify the filing process by automating calculations and generating reminders for HMRC VAT payment dates. This reduces errors and ensures timely submissions.
• Reviewing Returns for Accuracy – Before submitting your VAT return, double-check all figures to avoid any mistakes. Errors in reporting VAT collected or paid could lead to penalties, especially if deemed careless or deliberate by HMRC. So check and check again!
• Seek Professional Help if Needed – If VAT compliance feels overwhelming, consulting a specialist can be beneficial. For example, if you need a hand with UK VAT registration, companies like ours, Companies MadeSimple can offer expert advice to help businesses stay compliant. VAT can be complex, and errors may lead to fines, so if in doubt reach out to a professional. 

Steps to Take if You Miss a Deadline 

Mistakes happen and you may find that at least once or twice in your business’s lifetime, you’ll miss your VAT deadline. If you do, don’t panic, but do act quickly. The longer you leave it the more you may be penalised. So, here is what you should do: 

• Contact HMRC Immediately – You’ll need to Inform HMRC as soon as possible to discuss your situation. 
  Provide a Reasonable Excuse – If you have a valid reason for missing the VAT filing deadlines—such as serious illness or a system failure—you may be able to appeal against penalties. HMRC considers reasonable excuses on a case-by-case basis.
• Make Full Payment Quickly – Even if your VAT return is late, paying the outstanding amount as soon as possible can help reduce penalties and prevent any interest charges.
• Set Up a Payment Plan – If you’re unable to pay the full amount immediately, HMRC may allow you to arrange a payment plan. This can help businesses manage cash flow while staying compliant.

Taking action and moving quickly can prevent further financial consequences and help maintain your business’s good standing with HMRC.

Conclusion

Knowing your VAT deadlines is key for your business, filing on time keeps your business compliant and is good for your budget too! If you find yourself worrying about sticking to deadlines reach out to an accountant or tax professional or use software. It can be better for your business in the long term to get help from the beginning. 

FAQs

When is my VAT return due?

Your VAT return is normally due one month and seven days after the end of your VAT accounting period. Most businesses file quarterly, but some file monthly or annually depending on their VAT scheme. HMRC expects both the return and any VAT owed to be submitted and paid by the deadline.

What happens if I submit my VAT return late?

If you submit your VAT return late, HMRC adds a penalty point to your record. When you reach your penalty threshold, you receive a £200 fine. Any further late submissions also result in additional £200 penalties. The points stay until you file all returns on time for a set compliance period.

What happens if I pay my VAT bill late?

If you pay your VAT late, HMRC charges late payment penalties and interest. The penalty amount depends on how many days overdue the payment is. Interest is added daily until the VAT is fully paid. Even small delays can increase costs, so paying on time helps you avoid unnecessary charges.

How does the HMRC VAT penalty points system work?

You receive one penalty point for each late VAT return. Each business has a threshold based on its filing frequency, and once you hit that threshold, you get a £200 fine. To reset your points, you must file all future returns on time for a compliance period and submit any outstanding returns.

Can HMRC waive VAT penalties if I have a reasonable excuse?

Yes, HMRC may remove penalties if you can show a reasonable excuse, such as serious illness, system failures or unexpected technical issues. You must explain what happened and show that you submitted the VAT return or payment as soon as you were able. Routine workload pressures do not qualify.

How can I avoid VAT penalties and late payment charges?

You can avoid penalties by using accounting or bookkeeping software that supports Making Tax Digital, setting up reminders, checking deadlines and ensuring you have the correct VAT rate applied. If you think you may miss a deadline, contacting HMRC early can sometimes reduce penalties or interest.

Do VAT penalties affect future VAT returns?

Penalty points stay on your record until you complete a clean compliance period, which depends on how often you file. While penalties do not change your VAT rates or deadlines, repeated late submissions can create a history of non-compliance, increasing the chance of HMRC checks or interventions.