VAT Returns and Deadlines Explained: How HMRC’s Penalty Points System Works

Understanding VAT Returns and Deadlines

Submitting VAT returns on time is more important than ever. HMRC has introduced a penalty points system for late VAT returns, replacing the old “default surcharge” regime.

This means every late submission adds up — and once you hit the threshold, financial penalties apply. Even one missed return can cause stress, but persistent lateness can quickly become very costly.

This article explains how VAT returns work, the deadlines you must meet, and how HMRC’s penalty points system affects your business.

What Is a VAT Return?

A VAT return is a summary report showing

• Output tax – the VAT you’ve charged customers.

• Input tax – the VAT you’ve paid on business expenses.

• The difference – whether you owe HMRC or are due a refund.

Most businesses file quarterly returns, but some file monthly or annually.

👉 Example: If you’ve charged £12,000 VAT on sales but paid £9,000 VAT on expenses, you owe HMRC £3,000.

VAT Return Deadlines

• Your VAT return is normally due 1 month and 7 days after the end of your VAT period.

• Payment must reach HMRC by the same deadline.

👉 Example: A VAT quarter ending 30 June must be submitted and paid by 7 August.

Missing the deadline triggers HMRC’s penalty points system.

HMRC’s VAT Penalty Points System

Since 1 January 2023, HMRC uses a points-based system for late VAT returns:

How It Works

• Each late submission = 1 penalty point.

• When you hit the penalty point threshold, you receive a £200 penalty.

• Every late return after that = another £200 penalty while you remain at threshold.

Thresholds by Filing Frequency

• Annual filers – 2 points.

• Quarterly filers – 4 points.

• Monthly filers – 5 points.

👉 Example: A business filing quarterly VAT returns misses 4 deadlines. On the 4th late return, HMRC charges a £200 penalty. Every further late submission = £200.

Expiry of Penalty Points

Points expire after 24 months if you don’t reach the threshold.

• If you’ve hit the threshold, you must:

  
  

  1. Complete a period of compliance (submitting all returns on time for up to 2 years, depending on filing frequency).

  2. Submit any outstanding late returns.

     
     

• Only then are points reset.

Exempt Returns

Some VAT returns do not attract penalty points:

• Your first return after registering.

• Your final return after de-registering.

• One-off returns covering irregular periods.

Common Mistakes to Avoid

1. Forgetting deadlines due to poor bookkeeping systems.

2. Relying on manual reminders instead of automated alerts.

3. Confusing VAT return deadlines with corporation tax/self-assessment dates.

4. Failing to pay on time even if the return is submitted.

Why It Matters

• Persistent lateness can quickly rack up £200 penalties.

• Late VAT payments also attract separate late payment penalties and interest (calculated daily).

• HMRC doesn’t accept “I didn’t know” as a valid excuse — the responsibility rests with the business.

How Wexley & Associates Helps

We make VAT deadlines stress-free by:

• Monitoring VAT periods and filing deadlines for all clients.

• Preparing and submitting VAT returns on time, every time.

• Providing automated reminders and proactive planning so clients never fall foul of penalty points.

With our support, VAT becomes manageable and predictable — never a source of costly surprises.

Stay Ahead of VAT Deadlines

Don’t risk unnecessary £200 penalties under HMRC’s points system.

Contact Wexley & Associates today to ensure your VAT returns are always accurate, compliant, and submitted on time.

References

• HMRC: VAT Returns

• HMRC: Penalty Points and Penalties if You Submit VAT Returns Late

• Related: HMRC Simplified – Charging & Reclaiming VAT