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VAT Deadlines: Surcharges and Penalties

Managers can check some essential information inside a company VAT online account. The details include the VAT Return and payment deadlines.

VAT RETURN DEADLINE: Value Added Tax online accounts inform you:

  1. The dates showing when a Vat Return is due.
  2. The date when payments must clear through the account at HM Revenue and Customs.

Note: This date is ‘not‘ the day you should send the payment.

The general rule is one calendar month and seven days after the end of the ‘accounting period’ is the deadline. This is the date to send a VAT Return online and pay the bill to HMRC.

Note: HMRC must receive the payment in their account ‘before‘ the deadline. The time frame for sending and receiving payments can vary depending on how you send them. Weekends are not usually counted as ‘working days‘ and the time of day also can affect things.

VAT Deadline Exceptions

Using the VAT Annual Accounting Scheme means the return deadlines are different. There are several other schemes that also differ for time limits. Always check your online account for the correct dates.

How to Pay VAT Bill

There are several ways to pay a VAT bill but it must be an electronic transaction (e.g by direct debit or Internet banking). Most businesses cannot pay their bills by cheque.

Note: Always contact HM Revenue and Customs and inform them if you are having difficulties paying your VAT bill. The deadline for businesses to join the VAT Deferral New Payment Scheme is the 21st of June 2021.

VAT Surcharges and Penalties

A ‘default’ is recorded by HM Revenue and Customs if they do not receive the return by the VAT deadline dates. They also issue a default if the full payment due is not received in their account by the deadline.

Value Added Tax Surcharge

As a rule, those who default enter into a 12-month ‘surcharge period‘. During this period, if you default again the surcharge extends for another 12 months. An extra ‘surcharge’ may then get added to the VAT you need to pay.

Anyone who defaults will receive a letter from HM Revenue and Customs. They will write to explain the amount of any surcharges that you owe to them. HMRC also explain further penalties for defaulting again within the current surcharge period.

How Much is VAT Surcharge?

The surcharge relates to amounts due for the accounting period in default. It is a percentage of the outstanding Value Added Tax. The surcharge rate increases if a further default occurs. Check the tables to see how HMRC calculate surcharge payments:

Surcharge and Penalty Tables

Defaults in a surcharge period (12 months) Surcharge due if your annual turnover is less than £150,000 Surcharge due if your annual turnover is £150,000 (or more)
2nd default No surcharge applies 2% (no surcharge if less than £400)
3rd default 2% (no surcharge if less than £400) 5% (no surcharge if less than £400)
4th default 5% (no surcharge if less than £400) 10% or £30 (whichever is higher)
5th default 10% or £30 (whichever is higher) 15% or £30 (whichever is higher)
6 or more defaults 15% or £30 (whichever is higher) 15% or £30 (whichever is higher)

Note: As a rule, there is no surcharge for the first default made by a company.

VAT Surcharge Penalties

The top penalties HM Revenue and Customs can charge are:

  • 100% of the tax amount understated or over claimed in the return due to carelessness or a deliberate mistake.
  • 30% of VAT assessments that are too low if the company does not inform HMRC about the error within 30 days.
  • A £400 penalty for submitting a VAT return in paper form. This does not apply if HMRC confirm the company is exempt from submitting online returns.

VAT Surcharge Exemptions

You do not get a surcharge if you are late in submitting a VAT Return if:

  • The full about of tax gets paid by the due date.
  • There is no tax payable.
  • You are due a refund


VAT Returns: Information explaining the quarterly ‘accounting period’ for small businesses.
Send a VAT Return: How to submit a return online to HM Revenue and Customs.
VAT Assessment: Send your VAT Return and any payment due immediately.
VAT Interest Rates: Businesses need to pay interest on underpaid or on overpaid VAT.

VAT Return Deadlines, Surcharges, and Penalties in the United Kingdom