• Posted 3rd September 2015

VAT Returns: Surcharges & Penalties

Have you missed the deadline for submitting your VAT return and making VAT return payments? If you have, you should know about the surcharges and penalties that you could face for missing the deadlines. You can contact HMRC to find out whether you have to submit your returns through online or paper. If you are submitting your VAT return online, you will need a VAT number and VAT online account. If HM Revenue & Customs (HMRC) do not receive your VAT return by the deadline or hasn’t received the full payment for the VAT due on your return in their account by the deadline, then they will record a default. Such default will put in a 12 month ‘surcharge period’. If you default again, the surcharge period will be extended for further 12 months. In addition, you may have to pay an extra surcharge along with the VAT you owe. This surcharge is a percentage of the VAT outstanding on the due date for the default accounting period. Whenever you default again in the surcharge period, the surcharge rate also keeps on increasing each time. When you default for the first time, you do not have pay any surcharge. However, when you default for the second time within the 12 months, you do not have to pay surcharge if your annual turnover is less than £150,000 but should pay 2% surcharge (no surcharge if less than £400) if your annual turnover is £150,000 or more. When you default for the third time default within the 12 months, a 2% surcharge (no surcharge if less than £400) will be charged if your annual turnover is less than £150,000 but a 5% surcharge (no surcharge if less than £400) if your annual turnover is £150,000 or more. Likewise, a fourth time default will charge you a 5% ( no surcharge if less than £400) if your annual turnover is less than £150,000 but 10% or £30 (whichever is more) if your annual turnover is £150,000 or more. In the fifth time default, you have to pay 10% or £30 (whichever is more) if your annual turnover is less than £150,000 but 15% or £30 (whichever is more) if your annual turnover is £150,000 or more. A sixth or more default will charge you a 15% or £30 (whichever is more) even if your annual turnover is less than £150,000 or £150,000 or more. Talking about the penalties, if you send a return that containing a careless or deliberate inaccuracy, you could face a penalty up to 100% of any under-stated or over-claimed tax. If HMRC sends you a return that is too low and you do not inform it as wrong within 30 days, then HMRC can charge you a penalty of 30% of an assessment. If you submit a paper return when HMRC hasn’t exempted you from submitting your return online, you could face a penalty of £400. If you have any more questions, speak to one of our VAT advisers at 020 7060 9556 today.