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)

When is 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 second 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 companies. You should double check the above information before making a payment to HMRC.

You can find more information about tax payments in UK in the guidance published by HMRC on VAT payments.

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.

In the past, a UK bank account was mandatory to get your refunds via bank transfer. In case you did not have a UK account, HMRC would issue a check in the name of the company that can be cashed in an overseas bank account. If this check cannot be cashed, the business would need to open a UK bank account to get the VAT refund. Very often, these non-established companies face issues to receive and cash the cheques issued by HMRC.

In November 2021, in order to ease this procedure, HRMC published an update on this procedure so it is possible for non-established businesses to obtain a refund in their foreing bank account. In order to benefit from this update, a form providing the bank account details of the company must be submitted. Once done, next time your company is in refund position, tax authorities will send an electronic repayment order instead of the old paper check.

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

Finally, when your VAT refund is not reimbursed within the regular timeframes, HMRC must pay a repayment interest, added to the VAT refund amount. This interest is calculated from the day your payment is overdue to the day your payment is made in full. Late payment interest is calculated as the Bank of England base rate plus 2.5%. Find more information from HMRC on the repayment interest here.

More information is available in the online guidelines published by the authorities, and under the following link to the update announced by HRMC.

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

Points-based system: each late submission means your are given 1 penalty point. If you exceed your penalty point threshold, you receive a penalty of GPB 200 for each late submission. The penalty thresholds depend on the frequency of filing: i) quarterly, the penalty threshold is 4, in a period of 12 months; ii) monthly, the penalty threshold is 5, in a period of 6 months; iii) annually, the penalty threshold is 2, in a period of 24 months.
Late payment

The UK authorities apply the penalty rate depending on how soon you have made the VAT payment: i) during the first 15 days, you do not receive a penalty if the payment is made in full or agree on a payment plan with HMRC; ii) between day 16 and 30th after deadline, you receive an initial penalty calculated at 2% on the VAT due; iii) when the VAT remains unpaid after 30 days, the penalty increases up to 4%, because you will receive a first penalty calculated at 2% at day 15th, plus 2% on the VAT due by day 30th. You will receive a second penalty calculated at a daily rate of 4% per year for the duration of the outstanding balance. The final penalty amount is calculated when the outstanding balance is paid in full or a payment plan is agreed.

Separately,HMRC will charge a late payment interest from the day payment is overdue to the day payment is made in full, calculated at the Bank of England base rate plus 2.5%.

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 to 18 months late: 10% of VAT due

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

If any other purchase under the reverse charge mechanism is missed, the UK authorities will normally not apply any penalties.

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

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

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.