Nixon Williams

Filing a late VAT return

IR35 Test


On occasions your VAT return might be submitted late to HMRC.

Paying VAT late is a bad idea and can involve heavy penalties for persistent offenders.

Warnings and Penalties

For your first late VAT return you have ‘one free go’ and just receive a warning letter.

Another late return in 12 months results in a penalty of 2%.

A further late return within 12 months of the last and the penalty rises to 5%.

Rises continue to 10% and then 15%.

After you get your returns back in on time for a full 12 months you receive your record is reset and returns to ‘one free go’.

Avoiding the Penalty Charges

You will need to have a “reasonable excuse” to avoid penalties.

The legislation specifically excludes reliance on others as an excuse. Therefore, if it was your account that filed the return late then you will still need to pay the penalty and discuss some sort of reimbursement with your accountant. They will normally have a cut off time for receiving your VAT details to file a return.

Other reasonable excuses that have surfaced in VAT tribunals have been:

  • No money: When a large proportion of the revenue comes from a customer who has not paid.
  • Breakdown: Records lost, damaged or stolen.
  • Illness: If the key employee who prepares the records was seriously ill.

If you are able to pay a proportion of your bill then it is worth agreeing a partial payment with HMRC. Then only the amount left to pay can be subject to penalties.

If you pay VAT on line then you get an extra 7 days to pay.

Published: Monday, November 14, 2005

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