Guides

VAT Payment Submission Guide

VAT payment and submission guide

At Ellis Lloyd Jones we will do everything in our power to make sure that your VAT return is submitted on time and that any tax is paid on time. However, it is important that you understand the basics of submission and payment to avoid any unexpected surprises.

Deadlines for sending in your VAT return

Most VAT returns are issued on a quarterly basis. If this is the case then your online VAT return must be filed with HMRC by midnight 1 calendar month and 7 days after the end of the quarter.

So for a business who has a VAT return quarter ending 31st March 2015, the deadline for filing the VAT return online is 7th May 2015.

If you are using the Annual Accounting Scheme for VAT purposes then you submit your VAT return once a year.

And if the return goes in late…….

HMRC will record a ‘default’ on your account if you do not file your VAT return by the deadline.

You may also enter a ‘surcharge period’ if you default which has implications for further defaults that occur.

For example, if you default on filing your VAT return by the deadline and subsequently default again then you will enter a surcharge period of a further 12 months and could face a surcharge on top of the VAT that you owe.

The surcharge amount is based on your VAT liability and increases every time you default within the surcharge period. You do not pay a surcharge for your first default.

The table below shows the surcharge percentages you’ll have to pay if you default.
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 more)
5th 10% or £30 (whichever is more) 15% or £30 (whichever is more)
6 or more 15% or £30 (whichever is more) 15% or £30 (whichever is more)

 

There are some exceptions to this where there will be no surcharge for a late VAT return if you;

  • Pay your VAT liability in full by the due date
  • Have no VAT liability due
  • Are due a VAT repayment

On top of the surcharges, HMRC can also charge penalties as follows if your VAT return is not submitted correctly;

  • 100% of any tax under-stated or over-claimed if you send a return that contains a careless or deliberate inaccuracy
  • 30% of an assessment if HMRC sends you one that’s too low and you don’t tell them it’s wrong within 30 days
  • £400 if you submit a paper VAT Return, unless HMRC has told you you’re exempt from submitting your return online

And if the return doesn’t get filed…….

If you don’t send your VAT Return and pay any VAT due on time, you will get a ‘VAT notice of assessment of tax’ from HM Revenue and Customs (HMRC), telling you how much VAT they think you owe.

In order to rectify this, you need to file your VAT return and pay any liability due immediately.

Paying your VAT

The quickest and safest way to pay your tax is online at HMRC’s website. You will need your 9 digit VAT registration number to do this.

If you prefer you can pay your tax using the following methods which are outlined on HMRC’s website:

Direct Debit

Bank details for Faster Payments by online/telephone banking or CHAPS

Paying at your bank by Bank Giro

At the Post Office

Standing order

Deadlines for paying your VAT

You must pay your VAT liability by midnight 1 calendar month and 7 days after the end of the quarter. If you pay via Direct Debit, you have an additional 5 days before the funds are withdrawn from your nominated bank account.

And if you don’t pay your tax on time……

Interest charges if you pay late

You will have to pay interest on anything you owe and haven’t paid. Interest may be charged if you;

  • report less VAT than you charge, or reclaim more than you pay
  • pay an assessment that HMRC later find was too low
  • let HMRC know you owe them VAT because of a mistake on your VAT Return

Find out the latest interest rates on late payments

HMRC will send you a notice telling you how much you owe and how it’s worked out.

If you don’t pay within 30 days, further interest is charged on the VAT due from the date of the notice. You’ll be charged interest for as long as you don’t pay, up to a maximum of 2 years.

You cannot deduct the interest HMRC charges you when working out your taxable profits.