For VAT accounting periods starting on or after 1 January 2023, a late VAT return can give the business a penalty point. Reaching the applicable threshold triggers a £200 penalty, and further late returns while at the threshold can trigger another £200 each. This is a filing system: it is separate from interest and penalties for paying VAT late. A nil or repayment return can still be late. HMRC: VAT late-submission points.
The old VAT default-surcharge rules can still matter for accounting periods starting on or before 31 December 2022. Check the period on the actual return rather than applying a current points table to an older liability.
The VAT return and the VAT payment often share a deadline, but they are different obligations. A company can submit its return on time and pay late, or pay money to HMRC while failing to submit the return. One action does not automatically correct the other. The return deadline is usually one calendar month and seven days after the accounting period, though the company’s actual period and arrangements should be checked in its VAT account. HMRC: submit a VAT return.
If a return is outstanding, submit it using substantiated records as soon as possible. Check whether HMRC has issued an assessment because it did not receive the return, and reconcile that with the company’s figures and payments. Do not wait for a payment plan or finance application before dealing with the filing task.
How penalty points and £200 charges build up
HMRC sets the point threshold according to the usual frequency of returns:
| Usual VAT return frequency | Points threshold | What happens at the threshold |
|---|---|---|
| Annual | 2 | £200 penalty when the threshold is reached. |
| Quarterly | 4 | £200 penalty when the threshold is reached. |
| Monthly | 5 | £200 penalty when the threshold is reached. |
One late return normally adds one point until the threshold is reached. While a business remains at the threshold, a further late return can bring another £200 penalty rather than another point. A return filed on time while the business is at its threshold does not itself incur a £200 penalty, but the existing points do not disappear merely because that one return was timely. HMRC’s worked quarterly example illustrates this.
HMRC lists exceptions, including the first VAT return for a newly registered business and the final return after cancellation. Non-standard accounting periods and changes in frequency have special rules. Do not infer the correct threshold solely from a calendar-year assumption; check how the company is registered.
Example: a quarterly return filed late
Suppose a limited company normally files quarterly and already has three late-submission points. It misses another deadline for a return in the current regime. That fourth point reaches the quarterly threshold and a £200 penalty can be charged. If its next return is on time, it avoids a new £200 charge for that return but remains at the threshold until the points are removed under HMRC’s rules. If a later return is late while it remains at the threshold, another £200 can be charged. This follows HMRC’s published example.
The example assumes the returns are within the points regime and no exception or successful appeal changes the outcome. It does not calculate late-payment charges; those depend on whether the VAT itself was paid on time.
How points are removed
If the company has not reached its threshold, individual points may expire automatically after a period that depends on the return due date. HMRC’s points-removal guide sets out the precise month-end calculation; saying that every point vanishes exactly 24 months after its date is too simple.
At the threshold, HMRC says the company must meet both conditions to reset its points: complete a period of on-time returns and submit all outstanding returns for the previous 24 months. The compliance period is 24 months for annual returns, 12 months for quarterly returns and six months for monthly returns. The official guide explains when the period starts and how earlier missing returns affect the reset. Filing promptly now helps, but it may not remove all points immediately.
What if a point or penalty seems wrong?
Check the decision against the company’s VAT online account, filing receipt, actual deadline and accounting period. A return may have been submitted under the wrong registration or after a deadline the company calculated incorrectly. Keep the submission evidence, relevant correspondence and any circumstances that explain the delay.
HMRC says a penalty decision letter offers a review, and a business can choose an HMRC review or appeal to the tax tribunal. A point or penalty may be cancelled or amended where there is a reasonable excuse; that is a decision on the facts, not an automatic waiver for every cash-flow problem. Use the appeal route and time limit stated in the current decision and HMRC’s guidance. Do not assume that borrowing to pay VAT removes a filing point.
Keep filing and payment in one calendar
The most reliable prevention is a named owner for each VAT period, a reconciliation date before the deadline and confirmation that the return was accepted. Put payment clearance into the same checklist, because submitting a return does not pay it. If the company sees a cash shortage coming, contact HMRC about payment without delaying the filing work.
| Before the deadline | Evidence to keep |
|---|---|
| Reconcile sales, purchases and adjustments | Figures and source records for the return. |
| Confirm the correct period and amount | VAT-account view and reviewer sign-off. |
| Submit the return | Submission receipt or confirmation. |
| Arrange payment or discuss a shortfall | Payment reference, bank confirmation or HMRC discussion record. |
The VAT payment deadline guide covers timing. For the separate cost of an unpaid balance, use the VAT late-payment penalty guide after it is live.
Common questions
Can a nil VAT return receive a point?
Yes. HMRC says late-submission rules include nil and repayment returns in the current regime, unless a stated exception applies.
Is a £200 penalty charged for the first late return?
Usually not under this points regime if the company starts below its frequency-based threshold. A point is normally added; the £200 charge arises when the threshold is reached. Check exceptions and the company’s existing points.
Does a Time to Pay arrangement remove filing points?
No. Time to Pay concerns paying the tax. Filing points follow return deadlines and their own removal rules.
Can the company appeal?
HMRC provides a review or tribunal appeal route. Check the decision letter, evidence and time limit; a reasonable excuse is considered on its facts.
Next step: check the company’s VAT account for missing returns and points, file any outstanding return, then deal separately with an unpaid balance through HMRC or a suitable funding comparison.