Avoid VAT penalties
Posted on 15th March 2018 at 17:23
As a VAT registered business, you have to do two things to avoid being charged a VAT penalty; pay your VAT on time and submit your VAT return on time. If you fail on either of those requirements twice in twelve months, you are put on the VAT equivalent of the naughty step, the surcharge. Businesses with turnover of £150,000 or more don’t get that one-time free pass as they enter the surcharge period after just one late payment or late return filing.
The surcharge period is a serious lobster-pot, as once you are in you can’t get out until you demonstrate a full twelve months of good behaviour. Any late payment or late filing within that twelve months means the surcharge period is extended for a further twelve months.
What’s more, the penalties start racking up. The first missed deadline within the surcharge period generates a penalty of 2% of the late VAT, the second a 5% penalty, then 10%, and thereafter a painful 15% of the late-paid VAT.
Don’t overlook your penalties
Even one day beyond the deadline means it’s late. However, it is easy to overlook a small penalty charge, as (if your annual turnover is under £150,000) you won’t receive a penalty bill for less than £400 until you reach the 10% penalty level.
The lesson to learn is: pay your VAT on time, every time.
Questions or queries?
Please do let us know if you have any questions or if you need any further help understanding the guidance – please call us on 01932 564098 or message us here.
Information correct at time of publication
This note was published from our Spring 2018 Newsletter dated March 2018.
Please be aware that the information above may have changed in subsequent months.
This note is written for the general interest of our clients and is not a substitute for consulting the relevant legislation or for taking professional advice.
Tagged as: VAT
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