Do you still need to submit your VAT return?
Meet deadlines and keep VAT returns as painless as possible
As an entrepreneur or small business owner it’s super important to be aware of HM Revenue & Customs (HMRC’s) deadlines for VAT return submissions.
If you’re feeling a little worried about when the next VAT returns are due then don’t stress, we got you.
What is VAT return?
Your business needs to be registered for VAT if it is generating VAT taxable turnover of more than £85,000 a year.
From the date of registration your business must be charging VAT on all standard and reduced goods and services supplied within the UK. Every business must then submit VAT returns to HMRC on a monthly, quarterly or annual basis.
If the VAT collected is more than the VAT incurred, then the difference is paid by the business to HM Revenue & Customs. If the VAT incurred is more, HMRC will refund the difference.
Examples of what the VAT return records for the accounting period are as follows:
- Your total sales and purchases
- The amount of VAT you owe
- The amount of VAT you can reclaim
- What your VAT refund or payment from HMRC is
When are the next VAT payments due?
Usually, if you pay your VAT monthly or quarterly, the deadline for submitting your return and paying any VAT you owe is one calendar month and seven days after the end of the VAT period.
However, because of coronavirus (COVID-19), you can delay (defer) any VAT payments due between 20 March 2020 and 30 June 2020. If you choose to defer a VAT payment, you will have until 31 March 2021 to pay it.
Leave your tax to the experts and concentrate on the finer things in life
How do I pay my VAT bill?
Making Tax Digital (MTD) means that VAT bills must all be paid to HMRC electronically, for example through direct debit or internet banking.
What are the penalties if I submit it late?
Although HMRC are now offering small businesses to ‘defer’ VAT payments, it’s still important to be aware of the penalties.
HMRC will record a ‘default’ if:
- they do not receive your VAT return by the deadline
- full payment for the VAT due on your return has not reached their account by the deadline
You may enter a 12-month ‘surcharge period’ if you default. If you default again during this time:
- the surcharge period is extended for a further 12 months
- you may have to pay an extra amount (a ‘surcharge’) on top of the VAT you owe
If you submit a late return, you will not have to pay a surcharge if you:
- pay your VAT in full by the deadline
- have no tax to pay
- are due a VAT repayment
HMRC will write to you explaining any surcharges you owe and what happens if you default again.
HMRC can charge you a penalty of up to:
- 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 do not 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
