Depending on the VAT accounting period you’ve chosen, your deadline for VAT return will be a set date following submission. You should allow plenty of time for the payment to reach HMRC before the deadline fines of up to 15 per cent can be applied for late VAT payments.
How can I check the VAT deadline for my business?
Your VAT return due date will depend on a few things. When you initially registered for VAT, you or your accountant should have opted for one of three options:
- Monthly Returns
- Quarterly Returns
- Annual Returns
If you pay your VAT returns monthly, your deadline for VAT return will be within one month and seven days from the end of the return period. For example, if you have submitted the return for the period 1st-31st March, then payment for that period will be due by 7th May.
It’s a similar story for those who pay their VAT returns quarterly. You’ll have to submit and pay your VAT return to HMRC within one month and seven days of the end of the period. If you have submitted the return for the period 1st March 31st May, then payment for that period should be in HMRC’s account by 7th July.
Most companies choose to submit and pay their VAT quarterly as it’s frequent enough to keep on top of without having to do it every month. If you’d prefer the more predictable cash flow of paying monthly, then that can be arranged too. Log in to your VAT account to check which returns period you’ve chosen.
Can I make annual VAT returns?
There is another option. VAT registered businesses whose VAT taxable turnover is less than a certain threshold (currently £1.35m per year) can join the VAT Annual Accounting Scheme.
The Annual Accounting Scheme allows companies to make only one VAT return per year. Throughout the year, the company will make monthly payments on account of 10 per cent of the previous year’s VAT bill they’ll then settle the remaining amount after the year ends.
This scheme can work for businesses with very predictable turnover who wish to make fewer returns and pay a fixed amount each month. However, if sales fluctuate, it’s possible to be left with a hefty payment at the end of the year. Speak with your VAT accountant to see if the annual scheme could be a good fit for your company.
Your VAT returns will include the amount you have received in payments, along with any eligible VAT you have paid. This will leave you with a final sum that you owe to HMRC (or a repayment amount). It’s then up to you to decide how to pay VAT there are a few options; just make sure it’s in HMRC’s account before your deadline.
What happens if I am late to file or pay VAT?
HMRC applies penalties known as default surcharges on late tax payments. If you are late filing or paying your VAT, an escalating scale of penalties will apply.
At first, you may just receive a warning (depending on your business turnover). For any other missed deadline, you’ll receive fines that can eventually reach around 15 per cent so make sure you aren’t late. Remember, your VAT deadline is not the date you should pay; it’s the latest date by which your payment should reach HMRC’s account.
If you’re late and have a good reason, you may be able to avoid a penalty by applying with reasonable excuse. Examples of reasonable excuses include:
- Unexpected serious illness
- Some hardware or software issues
- Natural disasters (fire, flood etc.)
- Some delays due to disability
- Some delays out of your control.
These will need proof and are subject to HMRC recognition. Delays due to failed payments, mistakes or user errors won’t be considered a reasonable excuse.
Talk to the experts
VAT payments are a necessary step for businesses with high enough turnover. Should you find your business needs to pay VAT, it’s often a good idea to work with a reliable VAT accountant to guide you through the process. Get in touch with UWM today for expert advice.
