Penalties for mistakes made on VAT Returns
| Reason for the error | Disclosure of the error to HMRC NB A disclosure is unprompted if at the time you tell HMRC about it you have no reason to believe HMRC have discovered it, or are about to discover it. |
Minimum penalty (as a percentage of the tax) | Maximum penalty (as a percentage of the tax) |
|---|---|---|---|
| Careless (you fail to take reasonable care) |
Unprompted | 0% | 30% |
| Prompted | 15% | 30% | |
| Deliberate (you give HMRC a document which you know contains an inaccuracy) |
Unprompted | 20% | 70% |
| Prompted | 35% | 70% | |
| Deliberate and concealed (you give HMRC a document which you know contains an inaccuracy and you have tried to hide that inaccuracy) |
Unprompted | 30% | 100% |
| Prompted | 50% | 100% |
VAT Surcharge for late VAT Return Submission
| Defaults | Surcharge to pay (calculated as a percentage of your unpaid VAT at the due date) | Surcharge period |
|---|---|---|
| First default | No surcharge. Surcharge Liability Notice issued. | 12 months |
| Second default | 2% (unless it is less than £400, in which case you won’t be charged a surcharge at this rate) | 12 months from the date of the most recent default |
| Third default | 5% (unless it is less than £400, in which case you won’t be charged a surcharge at this rate) | 12 months from the date of the most recent default |
| Fourth default | 10% (unless it is less than £30 in which case you will be charged £30) | 12 months from the date of the most recent default |
| Fifth and subsequent defaults | 15% (unless it is less than £30 in which case you will be charged £30) | 12 months from the date of the most recent default |
Penalty for late VAT Registration
The penalty for registering late for VAT is calculated as a percentage of the VAT due (output tax less input tax), from the date when you should have registered to the date when we either H M Revenue & Customs received your notification, or became fully aware that you were required to be registered. The rate of penalty depends on how late you were in registering:
| If you registered | Then the penalty rate will be |
|---|---|
| not more than 9 months late | 5% |
| more than 9 months but not more than – 18 months late | 10% |
| more than 18 months late. | 15% |
There is a minimum penalty of £50.
