The Perils of Being Late Filing VAT Returns or Making Payment.

Date: 25/04/18

The Perils of Being Late Filing VAT Returns or Making Payment.

... and why one company was hit with a £300k penalty for paying just one day late.

When it comes to filing VAT returns and paying the VAT shown on the return, there is no margin for error. A company goes into default the moment the due date passes, whether the return is late, the payment is late, or both are late.

 The good news is that the default surcharge is based on the amount of tax unpaid, so there will be no surcharge if you submit a late VAT Return but:

  • have paid your VAT in full by the due date, but for some reason have not submitted the return on time
  • have no tax to pay
  • are due a VAT repayment

However, when a surcharge is due, the amount is calculated as detailed below.

First Default: You don’t pay a surcharge for your first default, but you will be issued with a surcharge liability notice, warning that if you default again within the next twelve months, you will be charged.


Defaults within 12 months

Surcharge if annual turnover is less than £150,000

Surcharge if annual turnover is £150,000 or more


No surcharge

2% (no surcharge if this is less than £400)


2% (no surcharge if this is less than £400)

5% (no surcharge if this is less than £400)


5% (no surcharge if this is less than £400)

10% or £30 (whichever is more)


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)











So why did one company get hit with a £300k penalty? Well, although it had always paid its VAT on time, it had previously filed VAT Returns after the due date and as such was already at the 4th stage of default. This meant that the first time it paid late, and with tax due of £3 million, the automatic surcharge was a hefty 10%. Ouch!

Once a company has a clean record for a full twelve-month period, the slate will be wiped clean and it will no longer be in default. 

So, don’t risk getting behind with your VAT. Call us on 01524 67111 and arrange an appointment to discuss how we can help you stay on top of your returns and payments.

Gareth Westworth

Author: Gareth Westworth

Gareth joined Scott & Wilkinson after leaving school in 1990, having attended Skerton High School before joining the sixth form at Lancaster Royal Grammar School. As a manager, Gareth is responsible for a varied portfolio of clients and is...

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