VAT returns and payments deadlines.
Most businesses submit quarterly on-line VAT returns, which are due to be received by HMRC no later than one month and 7 calendar days after the end of the business VAT quarter (EG; A Jan-March quarter VAT Return must be received at HMRC by May 7th). Payment of any VAT liability must be received by HMRC in cleared funds by the same deadline date of the 7th. However If a direct debit has been set up to enable HMRC to automatically deduct VAT payments from your business bank account, they will do so approx 3 days after the deadline date, on or around the 10th.
What is a HMRC VAT default?
HMRC record a default if they dont receive your VAT return by the deadline, and/or full payment of the VAT due on your VAT return hasnt been received by them in cleared funds by the deadline.
I’ve missed the deadline, what should I do?
OK you’ve missed a VAT Return Deadline, so the first thing you should is to accurately complete the VAT Return and submit it on-line as quickly as possible. Assuming you have a VAT liability, If you have a direct debit set up for HMRC to take the VAT due, they will then automatically take the payment from your bank account. If you dont have a direct debit in place, you should visit www.gov.uk/pay-vat to check out the payment methods that are available, and make your payment using the most suitable option for you.
Now that I’ve made the payment, what happens next?
HMRC may enter your business into a 12 month surcharge period if you default. If you default again during the next 12 months the surcharge could be extended for a further 12 months and you may have to pay a surcharge on top of the VAT you owe.
How much are the surcharges?
Your surcharge is a percentage of the VAT outstanding on the due date for the accounting period that is in default. The surcharge rate increases every time you default again in a surcharge period. See the table below;
|Defaults within 12 months||Surcharge if annual turnover is less than £150,000||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 greater)|
|5th||10% or £30 (whichever is greater)||15% or £30 (whichever is greater)|
|6th or more||15% or £30 (whichever is greater)||15% or £30 (whichever is greater)|
If you need advice about managing your VAT Returns, please contact us and we will be very pleased to help.