Missed VAT returns in the UK: penalty points, late payment and catching up
Each VAT return you submit late earns one penalty point. A quarterly filer who reaches 4 points pays £200, and £200 for every late return after that. Late payment is separate: 3% of what is still unpaid at day 16, another 3% at day 31, then 10% a year, plus interest at the Bank of England base rate plus 4%. To catch up, submit every missing return — points only reset once all returns for the previous 24 months are in — then agree Time to Pay for what you can’t pay.
Import and categorise free. Preparing the VAT return is on ELITE+ and AUTO+. 2Fin fills boxes 1–9; you submit through MTD-compatible software or your agent.
Late VAT: the figures that matter
From GOV.UK, read on 12 November 2026. The points system applies to VAT periods starting on or after 1 January 2023; earlier periods fall under the old default surcharge.
| What | Figure | Source |
|---|---|---|
| Penalty point | One for each return submitted late, nil and repayment returns included | HMRC, penalty points |
| Points threshold | 2 (annual), 4 (quarterly), 5 (monthly) | HMRC, penalty points |
| Late submission penalty | £200 on reaching the threshold, and £200 for each later late return | HMRC, penalty points |
| Late payment penalty | Nothing for days 1–15; 3% of the amount unpaid at day 15; another 3% of the amount unpaid at day 30; then 10% a year from day 31 | HMRC, late payment penalties (rates from 1 April 2025) |
| Late payment interest | Base rate + 4%: 7.75% from 9 January 2026, 8.00% from 24 November 2026 | HMRC, interest rates |
| Registration threshold | £90,000 taxable turnover in the last 12 months | HMRC, register for VAT |
| Due date | One calendar month and 7 days after the period ends | HMRC, submit your VAT Return |
| Records | At least 6 years | HMRC, keeping VAT records |
Let 2Fin do the boring bits
Catching up is mostly sorting, and sorting is the part 2Fin takes off you. Bring in two years of bank statements at once — CSV, Excel or PDF, several files in one go — and Fin reads every line; in testing, 1,891 transactions came in in about a second on a desktop computer. Each transaction is categorised with its GST or VAT worked out, every overdue quarter is listed with its due date, and Fill all periods saves a draft of each one with a single press.
What is left for you is the decisions, not the data entry. Purchases are grouped by payee — the wholesaler, the phone company, the van lease — so you answer each payee once and the answer covers every quarter. Fin’s confident guesses (80% sure or more) can be accepted in one tap and undone one by one, and a payee can become a rule so the next import sorts itself. Every figure opens to the transactions inside it, and the finished statements export for you or your agent to check and lodge.
How penalty points work
Every VAT return submitted after its deadline earns one point, including a nil return and one where HMRC owes you money. Points build up until you reach the threshold for your filing frequency: 4 for quarterly returns. At the threshold HMRC charges £200, and another £200 for every return after that which is also late. The first return after registering and the final return are not counted.
Below the threshold, points expire on their own after about two years. At the threshold, they only reset when you meet two conditions together: a period of compliance (12 months of on-time returns for a quarterly filer), and every return due in the previous 24 months submitted. That second condition is why a catch-up has to be complete, not partial.
Late payment is a separate penalty
Paying late is charged separately from filing late. Since 1 April 2025, nothing is charged for the first 15 days; then 3% of the VAT still unpaid at day 15; then another 3% of what is still unpaid at day 30, plus a daily penalty at 10% a year from day 31. Interest runs from the first day at the Bank of England base rate plus 4% — 7.75% from 9 January 2026, rising to 8.00% on 24 November 2026.
Agreeing a Time to Pay arrangement with HMRC can lower or stop the late payment penalties, which is a reason to ask early rather than wait. This is general information. Check what applies to you with a registered tax or BAS agent, or with the tax office.
Catching up: the order of jobs
If HMRC has already sent an assessment for a missing return, send the actual return straight away; if its estimate is too low and you don’t say so within 30 days, a penalty can follow. Then work through the remaining periods oldest first. Errors in returns you already sent can go on your next return if the net error is £10,000 or less (or up to £50,000 and no more than 1% of turnover); larger or deliberate errors are notified to HMRC separately.
Returns are submitted through software compatible with Making Tax Digital. If the business went over £90,000 and never registered, that comes first: VAT is due from the date you should have registered, and a failure-to-notify penalty is a percentage of the VAT lost, lower when you tell HMRC before it asks.
Rebuilding each quarter from your bank history
Download the bank statements for every overdue quarter. Box 1 is the VAT on your sales, box 4 the VAT you can reclaim on purchases, box 6 your sales before VAT and box 7 your purchases before VAT; boxes 2, 8 and 9 cover goods moved between Northern Ireland and the EU. On the Flat Rate Scheme, box 1 is your flat rate applied to VAT-inclusive turnover instead, and most purchases give no box 4 figure.
If you can’t pay
Submit the returns anyway, then set up Time to Pay, online or by contacting HMRC. HMRC checks affordability and usually asks for around half of your monthly disposable income; there is no fixed time limit on a plan. Interest continues on what is outstanding.
Importing your bank history and having it categorised starts free; preparing the BAS, VAT or GST statement is on the ELITE+ and AUTO+ plans (see plans).
Catching up on VAT returns, step by step
Check registration
If you passed £90,000 without registering, tell HMRC first; VAT is due from the date you should have registered.
Answer any assessment
If HMRC has assessed a missing return, send the real return straight away.
Prepare each quarter
From your bank history, work out boxes 1 to 9 for every overdue period, oldest first.
Submit through MTD software
Submit every outstanding return, including nil returns, through Making Tax Digital compatible software or your agent.
Agree Time to Pay
Set up an instalment plan for VAT you can’t pay now, before late payment penalties grow.
Keep 12 months clean
File and pay on time for 12 months (quarterly) so your penalty points can reset.
Take it further
Every overdue period listed with its due date, Fill all periods, purchases answered once per payee, and any figure opened to its rows.
Try the gst calculator →Add or remove GST/VAT on any amount, with the formula shown every time.
2Fin for sole traders →One account, two lives, already sorted
Tax invoice →The GST-compliant invoice that lets a buyer claim the GST back.
Input taxed →Sales with no GST that also deny credits on related purchases.
Common questions
What happens if you miss a VAT return deadline once?
You get one penalty point and no fine, as long as you stay under the threshold (4 points for quarterly filers). The point expires after about two years. VAT you pay late is charged separately: no penalty for the first 15 days, interest from day one.
How do I get rid of VAT penalty points?
Below the threshold they expire on their own. At the threshold they reset only when you have both submitted on time for a period of compliance (12 months for quarterly returns) and submitted every return due in the previous 24 months.
Can HMRC cancel a late VAT penalty?
Yes, for a reasonable excuse: you can ask for a review or appeal to the tribunal, and HMRC can cancel or amend points and penalties. Agreeing Time to Pay can also lower or stop late payment penalties. This is general information. Check what applies to you with a registered tax or BAS agent, or with the tax office.
Does 2Fin submit VAT returns to HMRC?
2Fin fills VAT Return boxes 1 to 9 for you to check and stops there. It is not connected to Making Tax Digital, so you or your agent submit the figures through MTD-compatible software. Preparing the return is on ELITE+ and AUTO+.
How long should I keep VAT records?
At least 6 years, and 10 years for One Stop Shop records. HMRC can normally assess 4 years back, 6 years where a return was careless and up to 20 years where it was deliberate.
Sources
- GOV.UK — Penalty points and penalties if you submit your VAT Return late — one point per late return; 4 points for quarterly filers; £200 at the threshold
- GOV.UK — Remove penalty points after a late VAT Return — a period of compliance plus all returns for the previous 24 months
- GOV.UK — How late payment penalties work if you pay VAT late — 3% from day 16, another 3% from day 31, then 10% a year; last updated 10 Jul 2025
- GOV.UK — Late payment interest if you do not pay VAT or penalties on time — Bank of England base rate plus 4%
- GOV.UK — HMRC interest rates for late and early payments — 7.75% from 9 Jan 2026; 8.00% from 24 Nov 2026
- GOV.UK — Submit your VAT Return — due 1 calendar month and 7 days after the period; Making Tax Digital software; correcting past errors
- GOV.UK — VAT Notice 700/12 — send a missing return at once if HMRC has assessed it
- GOV.UK — Register for VAT — £90,000 over 12 months; register within 30 days; VAT due from the date you should have registered
- GOV.UK — Penalties for failure to notify (CC/FS11) — a percentage of the VAT lost; lower when you tell HMRC unprompted
- GOV.UK — If you cannot pay your tax bill on time: pay in instalments — Time to Pay plans checked for affordability
- GOV.UK — VAT Flat Rate Scheme: how much you pay — flat rate by trade; 16.5% for a limited cost business
- GOV.UK — Keeping VAT records — at least 6 years
General information computed from published government guidance, not personal tax advice.
More on catching up on overdue returns
To catch up on overdue GST, VAT or BAS returns: work out every period you owe, rebuild each one from your bank history, file them all — oldest first — even if you can’t pay yet, then set up a payment plan and ask about penalty relief. Late filing usually costs less than not filing, and most tax offices go easier on people who come forward first. 2Fin does the bulk sorting: bring in years of bank statements at once and every overdue period is prepared for you to check; you or your agent file them.
Late GST/HST returns in Canada: penalties, relief and catching upThe CRA’s penalty for a late GST/HST return is 1% of the amount owing plus 0.25% of it for each full month late, up to 12 months; there is none when nothing is owing. Interest compounds daily (7% for October–December 2026). Since 1 October 2025 the Voluntary Disclosures Program gives 75% interest relief and 100% penalty relief to people who come forward before the CRA contacts them. File every period: refunds are held until all returns are in.
Overdue GST returns in New Zealand: penalties and catching upInland Revenue charges $50 for a late GST return on the payments basis and $250 on the invoice or hybrid basis. Paying late adds 1% the day after the due date and 4% on day 7, plus use-of-money interest at 8.97%. File every overdue return as soon as you can — otherwise Inland Revenue issues a default assessment — and set up an instalment arrangement in myIR for what you can’t pay.
GST vs VAT: what is the difference?GST and VAT are close cousins — both are consumption taxes added at the point of sale — but the name, rate and rules shift by country.
Get your missing VAT quarters prepared
Import your bank history free. Fin fills boxes 1 to 9 for each quarter for you to check and submit.
Get 2Fin free →Back to all guides, or explore the glossary.
