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Late VAT Payments & Meeting Deadlines

Licensed UK Insolvency Practitioners FREE Meeting for Company Directors

We can help with serious company debts, HMRC and creditor pressure, VAT/PAYE/Tax arrears, cashflow problems and raising finance.

Late VAT Payments: When Paying the VAT Late What Happens When You Miss a Deadline?

If you are late paying VAT to HMRC, you will face a penalty or surcharge liability notice based on whether you are a first time or consecutive offender.

In recent years there have been record numbers of companies which have been late paying VAT and if HMRC were to wind up every business that didn’t pay on time, they would realise little revenue. As a result, late VAT payment will ultimately cost a business more money in surcharges because HMRC are intent on collecting taxes and they mean to get their money. When paying the VAT late what happens when you miss a deadline? The answer to that depends on why you missed that deadline and how far in arrears you are.

Key Points to Be Aware of When Paying VAT Late

The first thing to understand is that HMRC does allow some amount of ‘forgiveness’ if it is the first late payment of VAT within a 12 month period might not accrue surcharges. You will be sent a warning letter called a ‘Surcharge Liability Notice’ which puts you in a surcharge period for a period of twelve consecutive months. If you miss another deadline within that timeframe, the consequences are based on the amount of your company’s VAT payments. Remember once a company misses a VAT deadline it will remain in debt management until it makes 3 consecutive payments.

The Amount of Turnover Affects Late VAT Payments

In terms of penalties for late vat payments, the magic number to keep in mind is £150,000. If a company’s turnover is greater than that amount, they are only provided one ‘grace’ period in which no surcharges will be attached whereas a company with a smaller turnover is first offered help and after the second default they are served a Surcharge Liability Notice. If your company has been issued a Surcharge Liability Notice, it is vital to understand the consequences if you don’t take steps to pay the taxman.

Late VAT Payments and Missed Deadlines

Seeking Professional Guidance When Paying VAT Late

Unfortunately, there are a number of different problems when dealing with late VAT payments and HMRC isn’t always as forgiving as they should be or could be. Sometimes it is necessary to explain to them the circumstances which caused late filings or payments and there are very few reasons which they find acceptable. For example, a fire resulting in the loss of all the company’s records would likely be just cause, but barring any catastrophic event, HMRC expects payment when it is due. A licensed Insolvency Practitioner can often intervene on your behalf to provide a bit of extra time and liaise with HMRC.

Beware of Sending Up Red Flags

One of the reasons why it is so important to seek professional assistance if your company is unable to pay VAT on time is because this signals HMRC that you may be trading insolvent. Insolvency experts can help circumvent any potential problems you may encounter and it may even be possible to find funds to pay the taxman before they can initiate an audit. With the economy in the state it is in, HMRC needs to collect every pound which is owed to them, including those dreaded surcharges. Let Real Business Rescue help you avoid serious consequences if you are late paying the VAT for reasons beyond your control.  HMRC liabilities are frequently the cause of companies insolvency.

The Amount of Turnover Affects Late VAT Payments

Defaults within 12 months Surcharge if annual turnover is below £150,000 Surcharge if annual turnover is £150,000 or over
2 NA 2% (0% if below £400)
3 2% (0% if below £400) 5% (0% if below £400)
4 5% (0% if below £400) 10% for £30 (highest applicable)
5 10% for £30 (highest applicable) 15% for £30 (highest applicable)
6 + 15% for £30 (highest applicable) 15% for £30 (highest applicable)

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  • Company Directors
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Jonathan Munnery
Gillian Sayburn
Julie Palmer
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