when to pay vat

When are VAT Payments Due?


When to pay VAT? If this is the question bothering you as you have registered your business for VAT with the HMRC. VAT is very confusing and you must ensure you have to pay VAT and you get a VAT refund from HMRC at the end of each tax year.

For this, you need to maintain a proper and accurate record of all the VAT received and VAT incurred to avoid any convenience later. The earlier you get your returns filed with HMRC, the better the chances to avoid any hassle on the last date of VAT payments.

The last-minute payments and calculations are not only stressful but also likely to bring inaccuracy in the calculation and ultimately in the tax return. So, let’s discuss when you should pay VAT and how many penalties you have to pay for late VAT payments!


Get in touch with one of the young and clever professionals and discuss VAT payments today. We ensure to provide the best guide to you. 


What is VAT?

Value Added Tax (VAT) is a tax on the supply of goods and services. This tax is supposed to be submitted by business owners or organisations who are supplying or delivering goods and services. This tax is collected and paid to the government on a quarterly basis. It is applicable to all standard and reduced-rated goods and services.

If you have paid tax and received this VAT from other sellers or customers, you need to calculate the difference and submit it to the HMRC. If the VAT received is more than the VAT incurred, you will submit the residual to the HMRC. Otherwise, you will get a refund from HMRC if the VAT paid is more than the VAT received.

All the financial services including bank charges, lottery games, insurance and medical services are exempt from VAT.


When to Pay VAT?

At the end of each financial period of a company, the company must submit the VAT returns to the HMRC. The deadline for these returns is one month and seven days after the accounting period of an organisation or a business comes to an end.

If your business is associated with an annual accounting scheme, the deadline for the VAT returns will be changed and you must submit returns on that basis. Normally, the VAT returns are submitted quarterly and after one month and seven days.

On the other hand, if you want to get notified about the VAT deadlines from the HMRC, you can create a VAT account and activate the reminders for VAT. You will be notified when the VAT returns are due and so you pay them on time without paying any penalty.


What Happens If I Get Late for VAT Returns?

If you default or are late on your VAT payments for the first time, you won’t pay any penalty to the HMRC. However, HMRC will add this default to their records. Next time, if you do not pay VAT returns on time, you will pay a penalty fee in addition to the VAT payable or due.

  1. On your second default, you will pay no penalty if the VAT is less than £150 000. If it is above this, you will pay a fee of 2%. However, there will be no surcharge if 2% is less than £400.
  2. On your third default, you will pay a fee of 2% for a VAT of less than £150 000 and 5% for beyond this.
  3. On your fourth default, you will pay a surcharge of 5% of a VAT for less than £150 000 or 10% for a VAT of more than £150 000. It could be a fixed amount of £30.
  4. You will pay 10% or a fixed amount of £30 for a Vat less than £150 000. You will pay 15% or a fixed amount of £30 for a VAT of more than £150 000 on your fifth default in a year.
  5. If it is your sixth default in a year, you will pay the same amount for a VAT of £150 000. It is 15% or a fixed penalty of £30.

Moreover, if you fail to declare any error, you will be surcharged with a penalty of 15% by the HMRC. Use for VAT652 to inform HMRC about the VAT errors to avoid any inconvenience later.


The Bottom Line

Finally, we conclude that every VAT-registered business should file its tax return at the end of each accounting period. This period is extended to one month and seven days after the accounting period. It is submitted quarterly for each company or organisation.

If you fail to pay your VAT on time, you are liable to pay the penalty on VATs less than £150 000 or more than this amount. It ranges from 2% to 10%, depending on the frequency of defaults in a year. There is no penalty for the first-time default. I hope you found the answer to your question of ‘when to pay VAT?’


We recommend finding professional help to further learn about how can you manage your VAT payments. Talk to our qualified tax advisors and get your queries answered quickly.


Disclaimer: The general information provided in this blog about when to pay vat includes its text and graphics. It does not intend to disregard any of the professional advice.

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