VAT returns in UK

Frequency of UK VAT returns

As a general rule, VAT returns are filed quarterly in the UK.

Monthly VAT returns can be requested by the taxpayer in case of regular repayment traders (e.g. Frequent exporters). HMRC may also ask a business to make monthly payments on account. These payments are advanced payments that are deducted from the overall quarterly payment when filing the quarterly VAT return. Payments on Account are mandatory for businesses with a VAT liability exceeding £2.3 million.

In the UK, the quarterly period does not always follow the calendar quarter. Businesses will choose their quarterly period when registering for online VAT services.

Annual VAT returns are allowed when your taxable turnover is below £1.35 million. The Annual VAT Accounting scheme requires advance payments throughout the year. Only one return is submitted for the complete 12-month period, this return may require a payment or a refund depending on the advance payments made during the year. More information on Annual VAT accounting is available in the online information published by the authorities.

Frequency of filing
- Monthly
  
  Regular repayment traders (upon request)
  
  Payments: VAT liability exceeds £2.3 million
- Quarterly
  
  Standard reporting period
- Annual
  
  Taxable turnover below £1.35 million
  
  (upon request)

UK VAT return due dates (deadlines)

You should check your VAT return submission and payment deadline in your HMRC online account. As a general rule, the due date to submit and pay VAT returns in the UK is the 7^th day of the month following the reporting period.

More information about the applicable deadlines is available here.

Businesses on the Annual VAT accounting scheme have different deadlines. These deadlines are published by the tax authorities.

Also, those businesses on the Payments on Account scheme have different deadlines. You can check them in the online information published by the authorities.

If the due date falls on a Sunday or bank holiday, the date is shifted to the previous working day.

UK VAT payments

VAT payments in UK can be made using different systems. The tax authorities accept BACS, CHAPS, direct debit, credit card or payments through online telephone banking. The bank details change depending on the method used. Taxpayers should also take into account the applicable delays until the payment becomes effective, as there is a risk of late payment due to this delay.

Non-established companies will often make payments from an overseas account. The details to be used for these payments are the following:

IBAN number: GB36BARC20051773152391
BIC Code: BARCGB22
Account holder: HMRC VAT
Bank address: Barclays Bank PLC; 1 Churchill Place; London; E14 5HP; United Kingdom.

The reference to be included when making VAT payments from an overseas bank account is the VAT number of the company making the payment. You should double check the above information before making a payment to HMRC.

More information in about tax payments is available in HMRC website.

UK VAT refunds

VAT repayments are automatically refunded by the UK tax authorities into the UK bank account of the company. It is not possible to carry forward a VAT credit to the next reporting period. Normally, it takes 10 to 15 days to get a VAT refund from the day the VAT return is submitted.

A UK bank account is mandatory to get your refunds via bank transfer. In case you do not have a UK account, HMRC will issue a cheque in the name of the company that can be cashed in an overseas bank account. If this check cannot be cashed, the business will need to open a UK bank account to get the VAT refund. It takes a longer time to get your VAT refunds via cheque.

The tax authorities may ask additional questions or carry an audit before accepting a repayment. In these cases, the VAT refund would be delayed.

More information is available in the online guidelines published by the authorities.

UK nil and corrective VAT returns

A nil VAT return needs to be submitted even if there are no transactions to be reported for that period.

Regarding corrections, there are two ways to correct your VAT returns:

Method 1: Adjusting the error in your current VAT return. This method can be used if the net value of your error does not exceed £10,000 or the error is between £10,000 and £50,000 but does not exceed 1% of box 6 for the current period.
Method 2: Submitting a corrective return with the form VAT652 or sending a Voluntary Disclosure (Error Correction Notice) to the competent tax officer. This method is mandatory if the net value of your error is between £10,000 and £50,000 and exceeds 1% of the box 6 amount for the current period during which the error is discovered or, in any case, if the error is greater than £50,000

More information on how to correct your VAT return is available in the VAT notice published by HMRC on VAT return corrections.

VAT penalties in UK

The following table summarizes the VAT penalties regime in the UK:

Cause

Penalty
Late filing

In practice, there are no penalties for a late VAT return provided the payment has been made in time. However, a "Surcharge Liability Notice" may be initiated when missing one return. See below
Late payment

The UK authorities send a "warning" the first time a VAT return or a VAT payment is missed. The warning is called "Surcharge Liability Notice" and gives the taxpayer a 12-month trial period in which, if the error is repeated, a penalty will be charged

In case the conditions in the Surcharge Liability Notice are not met (e.g. error repeated), a surcharge of 2% of the VAT due will apply. This penalty will increase to 5%, 10% or 15% if the error is repeated again. Also, an extended "Surcharge Liability Notice" will be issued

More information available in the online guidance published by the tax authorities
Late registration

As such, there is no one-off penalty for a late VAT registration. However, late VAT payment penalties in periods in which you are not VAT registered will be fined as follows:

- Less than 9 months late: 5% of VAT due

- 9 to18 months late: 10% of VAT due

- More than 18 months late: 15% of VAT due

If an intra-Community acquisition or any other purchase under the reverse charge mechanism is missed, the UK authorities will normally not apply any penalty.

Additional penalties may be charged by the authorities, particularly in case of fraud.

For penalties on ECSL, Intrastat and other returns, please see the relevant section.

UK Distance sales. VAT on e-commerce

You can find more information about the EU wide VAT regime on distance sales in our article about this topic in our website.

These are some of the rules applicable in UK regarding this regime:

The distance sales threshold is £70,000. Where the total amounts of sales to UK customers in any 12-month period exceeds this threshold, a registration is required
Foreign companies may opt to register in UK before the threshold is exceeded. UK companies may opt to register abroad if the threshold is not exceeded, this option is mandatory for 2 years once the application is sent
When a foreign e-commerce business registers in UK, a compliant VAT invoice must be issued for each UK client. It is however allowed to issue a "simplified invoice" which requires fewer details
Intrastat returns are due when the Intrastat threshold is exceeded.
VAT returns must report the sales as domestic sales only. Distance sales are not reported as intra-Community acquisitions followed by local sales
If goods are returned by the client, an intra-Community supply is not reported in UK
An ECSL return is never due on distance sales

UK Tax authorities contact

UK has a dedicated department for non-established companies. All VAT registrations for these businesses, as well as other VAT matters, are handled by the Non-established Taxable Persons Unit (NETPU).

Ruby House
8 Ruby Place
Aberdeen
AB10 1ZP
Scotland

Email: vrs.netpu@hmrc.gsi.gov.uk

Teléfono: +44 3000 527458

Established businesses should check in their VAT registration certificate the office that has been allocated to the company."

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