VAT penalties in UK
The following table summarizes the VAT penalties regime in the UK:
Late filingIn 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
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
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.