VAT Late Filing Penalties: HMRC Penalty Points, Charges and Deadlines

VAT late filing penalties use a points-based system rather than an automatic financial penalty every time a VAT Return is late.

For VAT accounting periods covered by the current rules, each late VAT Return normally gives you one penalty point.

Once you reach your penalty-point threshold, HMRC charges a £200 penalty. If you submit another VAT Return late while you remain at the threshold, HMRC can charge a further £200 for each additional late return.

Late filing and late payment are treated separately. This means a business can receive a penalty point for submitting its VAT Return late and also face separate penalties and interest if the VAT payment itself is late.

What Happens If You File a VAT Return Late?

If you miss your VAT return filing deadline, HMRC normally gives you one late submission penalty point.

You do not usually receive an immediate financial penalty for the first late return.

Instead, points build up until you reach the threshold that applies to your VAT submission frequency.

Once the threshold is reached:

• HMRC Charges a £200 Penalty
• Further Late Returns Can Trigger Additional £200 Penalties
• Your Existing Penalty Points Remain Until They Are Removed or Expire Under the Rules

This system is intended to penalise repeated late filing more heavily than an occasional missed deadline.

What Are the VAT Late Filing Penalty Point Thresholds?

The number of points you can receive before a financial penalty applies depends on how often you submit VAT Returns. 

Most VAT-registered businesses submit quarterly returns, so their normal threshold is 4 penalty points. Businesses using VAT Annual Accounting should note that annual filers have a different penalty-point threshold from quarterly and monthly filers.

Example of a Quarterly VAT Late Filing Penalty

Suppose a business submits quarterly VAT Returns. It already has three penalty points from previous late submissions.

The next VAT Return is also filed late.

The business receives:

Fourth penalty point + £200 financial penalty

If its following VAT Return is submitted on time, there is no additional £200 penalty simply because the business remains at four points.

However, if another VAT Return is later submitted late while the business is still at the four-point threshold, another £200 penalty can apply.

What Is the VAT Return Filing Deadline?

For most businesses, the deadline for submitting a VAT Return online is usually:

One calendar month and 7 days after the end of the VAT accounting period

The same date is normally also the deadline by which the VAT payment must reach HMRC.

For example, if a VAT period ends on 31 March, the normal VAT Return and payment deadline is 7 May.

Businesses should check their VAT online account because different arrangements can apply to some schemes.

Does the VAT Deadline Move If It Falls on a Weekend?

No. Businesses should not assume they can submit their VAT Return on the next working day.

The VAT submission deadline is a fixed statutory date.

If the due date falls on:

• Saturday
• Sunday
• Bank Holiday

the VAT Return still needs to be submitted by the stated deadline.

Businesses unable to submit at weekends should file before the due date.

Do You Get a Penalty Point for a Nil VAT Return?

Yes. A VAT Return can still be late even where there is:

• No VAT to Pay
• No VAT to Reclaim
• No Business Activity During the Period

Nil and repayment VAT Returns are generally included in the late submission penalty regime. This means businesses should not ignore a VAT Return simply because nothing is payable. If you are unsure whether a filing obligation still exists, check whether you need to submit a VAT return, even where no VAT is payable or reclaimable.

Are Any VAT Returns Excluded From Late Filing Penalty Points?

Certain returns are excluded from the normal penalty-point rules.

These can include:

• Your First VAT Return After Becoming VAT Registered
• Your Final VAT Return After Cancelling VAT Registration
• Certain One-Off Returns Covering Non-Standard Periods

The normal rules still apply to ordinary monthly, quarterly or annual VAT submission obligations. Businesses using the VAT Annual Accounting Scheme should also understand how their filing frequency affects the penalty-point threshold and compliance period.

What Is the Difference Between Late Filing and Late Payment?

VAT return late filing and late VAT payment are separate compliance failures. Businesses needing a broader refresher can also review how VAT works under the current UK rules, including filing, payment and VAT calculation responsibilities.

Late Filing

This relates to when the VAT Return itself is submitted.

The penalty system uses:

• Penalty Points
• £200 Financial Penalties Once the Threshold Is Reached

Late Payment

This relates to when VAT owed to HMRC is actually paid.

Late payment can result in:

• Percentage-Based Penalties
• Late Payment Interest

A business can therefore submit its VAT Return on time but still receive late payment charges if the VAT is paid late.

It can also pay its VAT on time but receive a penalty point if the return itself was filed late.

What Are the Current VAT Late Payment Penalties?

The late-payment penalty rates depend on the VAT accounting period and when the tax became due. For relevant newer VAT periods, HMRC generally applies a 3% first penalty at day 15, an additional 3% at day 30, and a second penalty calculated daily at an annual rate of 10% from day 31. Earlier VAT periods may be subject to the previous penalty rates. Late-payment interest is charged separately. The amount depends on how long the VAT remains unpaid.

Up to 15 Days Late

There is normally no first or second late-payment penalty.

However, late-payment interest still runs from the first day the VAT is overdue.

16 to 30 Days Late

The first late-payment penalty is:

3% of the VAT outstanding at the end of day 15

31 Days or More Late

The first penalty becomes:

• 3% of the Amount Outstanding at Day 15
• Plus 3% of the Amount Still Outstanding at Day 30

A second late-payment penalty also begins from day 31.

This second penalty is calculated daily at an annual rate equivalent to 10% of the outstanding balance until the relevant amount is paid or the penalty calculation otherwise ends.

VAT Late Payment Penalty Example

Suppose a business owes HMRC:

£10,000 VAT

and does not make any payment for more than 30 days.

The first late-payment penalty could be:

3% of £10,000 at day 15 = £300

plus:

3% of £10,000 at day 30 = £300

Total first penalty:

£600

A second penalty would also begin accruing daily from day 31 based on the outstanding balance.

Late-payment interest is separate and also applies.

Is Late Payment Interest Charged on VAT?

Yes. HMRC charges late-payment interest from the first day after the payment deadline until the outstanding amount is paid in full.

The late-payment interest rate is linked to the Bank of England base rate.

It is calculated at:

Bank of England base rate + 4 percentage points

This means paying within the first 15 days can avoid a late-payment penalty, but it does not necessarily avoid interest.

Can You Avoid VAT Late Payment Penalties With Time to Pay?

Potentially, yes.

If you know you cannot pay the VAT bill on time, contact HMRC as early as possible.

HMRC may agree a Time to Pay arrangement, allowing the VAT liability to be paid in instalments.

Agreeing an appropriate Time to Pay arrangement can reduce or prevent additional late-payment penalties.

The timing matters.

Days 1 to 15

Pay in full or agree Time to Pay before day 16 to avoid the first late-payment penalty.

Days 16 to 30

Act before day 31 to prevent higher penalties from arising.

Day 31 Onwards

Paying or agreeing Time to Pay can stop the second penalty from continuing to increase.

Interest can still apply to the outstanding balance.

What Happens If You Miss a Time to Pay Arrangement?

If HMRC agrees a Time to Pay arrangement and you later fail to meet its conditions, the arrangement can be cancelled.

HMRC may then calculate late-payment penalties as though the arrangement had not existed.

Businesses should therefore agree repayments they can realistically maintain.

If financial circumstances change, contact HMRC rather than simply missing an agreed instalment.

How Do You Remove VAT Penalty Points?

How points are removed depends partly on whether you have already reached the penalty threshold.

If You Have Not Reached the Threshold

Individual points normally expire automatically after the relevant period.

The expiry is broadly around 24 months, depending on the original VAT Return due date.

If You Have Reached the Threshold

You need to satisfy two conditions before your points can be reset.

Condition 1: Complete a Compliance Period

You must submit all VAT Returns on time for the required period.

Condition 2: Submit Outstanding VAT Returns

All VAT Returns due during the previous 24 months must have been submitted.

Once both conditions are met, your penalty points can be reset to zero.

Example of Removing Quarterly VAT Penalty Points

Suppose a quarterly filer reaches four penalty points.

To reset those points, it normally needs to:

1. Submit Every Quarterly VAT Return on Time for 12 Months
2. Submit All Outstanding VAT Returns Due During the Relevant Previous 24 Months

Completing only one of those requirements is not enough.

This is important because simply filing one VAT Return on time after receiving a £200 penalty does not immediately reset the points.

What Happens If You Do Not Submit a VAT Return?

Do not ignore a VAT Return simply because the deadline has already passed. If you fail to file, HMRC can issue an estimated VAT assessment based on what it believes you owe. That estimated amount may be higher or lower than your actual liability. You should still submit the missing VAT Return as soon as possible.

HMRC can then replace the estimate with the actual figures. Leaving the return outstanding can also make it more difficult to remove accumulated penalty points. When completing an outstanding return, businesses should first understand what is included in a VAT return so that HMRC can replace any estimated assessment with accurate figures.

Can HMRC Fine You for Repeatedly Filing VAT Returns Late?

Yes. Repeated late filing is exactly what the penalty-point regime is designed to address.

Once you reach your threshold:

• The Late Return That Reaches the Threshold Can Trigger a £200 Penalty
• Each Further Late Submission While at the Threshold Can Trigger Another £200 Penalty

For a quarterly filer repeatedly missing deadlines, the financial penalties can therefore build quickly.

Can You Appeal VAT Late Filing Penalties?

Yes. You can ask HMRC to review a penalty point or financial penalty if you believe it should not have been issued. An appeal may be appropriate where you had a reasonable excuse for missing the deadline.

If HMRC does not agree, further appeal rights may be available. You should keep evidence supporting the circumstances that caused the late filing or payment. Businesses needing help with penalty reviews, filing corrections or wider VAT compliance can also consider professional VAT services in London.

What Can Count as a Reasonable Excuse?

There is no single list that guarantees HMRC will accept an excuse.

HMRC considers the facts of each case.

Possible circumstances can include serious or unexpected events that genuinely prevented the business from meeting its obligation.

The important question is whether:

• The Circumstances Were Outside Your Reasonable Control
• You Took Reasonable Steps to Meet the Deadline
• You Corrected the Failure Without Unreasonable Delay Once the Problem Ended

Simply forgetting the deadline or relying on someone else without appropriate oversight may not be sufficient.

How Can Businesses Avoid VAT Late Filing Penalties?

A practical VAT filing process should start before the deadline approaches. Businesses should also understand their wider tasks as a VAT-registered business, including record keeping, filing, payment and Making Tax Digital responsibilities.

Keep Bookkeeping Up to Date

Do not wait until the end of the VAT period to enter several months of transactions.

Businesses that want to reduce the risk of missed deadlines may benefit from professional VAT return filing services in Farringdon to support regular bookkeeping, VAT reconciliations, MTD submissions and timely HMRC reporting.

Reconcile VAT Regularly

Check:

• Sales
• Purchases
• Bank Transactions
• VAT Control Accounts
• Import VAT
• Reverse Charge Entries

Regular reconciliations are also a good opportunity to assess whether your VAT control system is strong enough to catch coding, invoice and reporting errors before submission.

Know Your VAT Deadline

Check your VAT online account and accounting software.

Submit Before the Final Day

Leaving submission until the deadline increases the risk of:

• Software Problems
• Missing Information
• Internet Problems
• Staff Absence

File Nil Returns Where Required

A nil return still needs to be submitted.

Monitor Penalty Points

Businesses can check penalty information through their VAT online account.

How Does Making Tax Digital Affect VAT Return Filing?

Most VAT-registered businesses must maintain digital records and submit VAT Returns using compatible Making Tax Digital software. Businesses that need help with digital records, software submissions or HMRC confirmation can also use MTD VAT support in London.

Making Tax Digital does not change the fundamental VAT deadline.

The return still needs to reach HMRC by the required date.

If:

• Xero
• QuickBooks
• Sage
• Another MTD-Compatible Platform

fails to submit successfully, the business should confirm whether HMRC actually received the return.

A software-generated VAT Return is not necessarily filed until the submission has been accepted by HMRC.

How Do You Know HMRC Received Your VAT Return?

After submitting through compatible software, check the submission status.

You can also check your VAT online account to confirm whether HMRC has received the return.

This is particularly important if:

• The Software Displays an Error
• Internet Connection Was Interrupted
• The Submission Was Made Close to the Deadline
• HMRC Services Were Experiencing Problems

Keep submission confirmation as part of your VAT records.

What If Your VAT Software Fails on the Filing Deadline?

Try to resolve the problem immediately.

Useful evidence can include:

• Error Messages
• Software Support Tickets
• Screenshots
• HMRC Service Status Information
• Records of Attempts to Submit

If the problem results in a penalty point, evidence may be relevant when asking HMRC to review the penalty.

Businesses should still avoid deliberately waiting until the final minutes before the deadline.

What Are the Most Common VAT Return Filing Mistakes?

Common problems include:

• Missing the Submission Deadline
• Confusing the Filing Deadline With the Payment Date
• Assuming a Nil Return Does Not Need Filing
• Failing to Check Whether Software Submitted Successfully
• Waiting for the Next Working Day When the Deadline Falls on a Weekend
• Filing but Forgetting to Pay
• Paying but Forgetting to File
• Leaving Old VAT Returns Outstanding

A checklist before every submission can prevent many of these problems. Many of these issues can be reduced by focusing on VAT compliance and avoiding common pitfalls before each filing deadline.

What Should You Do If Your VAT Return Is Already Late?

Generally, submit the return as soon as possible. Waiting longer does not remove the missed deadline and may create additional problems. Businesses facing repeated filing issues may benefit from working with accountants experienced in VAT-registered companies to bring records, returns and payment obligations up to date.

A practical process is:

1. Complete the VAT Records
2. Submit the Outstanding VAT Return
3. Check Whether HMRC Has Issued a Penalty Point
4. Check Whether Any VAT Is Outstanding
5. Pay as Much as Possible
6. Contact HMRC If You Cannot Pay in Full
7. Consider a Time to Pay Arrangement
8. Check Whether Any Older VAT Returns Are Still Outstanding
9. Keep Evidence if You Believe You Have a Reasonable Excuse

VAT Late Filing Penalties at a Glance

CASE STUDY: Helping a Business Manage Repeated VAT Late Filing Penalties

A VAT-registered business contacted our Wimbledon office after receiving several VAT late submission penalty points and becoming concerned about further financial penalties.

The company filed quarterly VAT Returns and had already accumulated three penalty points. A fourth late return then pushed the business to the threshold, resulting in a £200 VAT late filing penalty.

CIGMA Accounting reviewed the company’s VAT filing history, bookkeeping process, outstanding returns and payment position. We explained that late filing and late payment are treated separately, meaning the business could receive a penalty point for submitting the return late while also facing interest or additional penalties if the VAT itself remained unpaid.

The review identified that bookkeeping was often completed too close to the filing deadline and that management was not always checking whether its Making Tax Digital software had successfully transmitted the return to HMRC.

We helped the business introduce a clearer VAT compliance process covering regular reconciliations, earlier preparation, submission checks and monitoring of existing penalty points.

Because the quarterly filing threshold had already been reached, we also explained that the business would normally need to maintain a 12-month compliance period and ensure relevant outstanding VAT Returns were filed before its penalty points could reset.

The client left with a clearer understanding of their position, options, and next steps.