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VAT penalties in UK

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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 (eg  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.