Exclusive: More than half a million UK businesses file VAT returns late
More than half a million VAT returns were filed late by British businesses last year, sparking concerns that many companies have been left exposed to interest payments and fines.
A total of 519,120 VAT returns were filed after the deadline — up 13 per cent on the previous year — as the pandemic sparked chaos for businesses.
Companies that file and pay their VAT late can be hit with hefty fines of up to 15 per cent of the total bill, with charges increasing each time a payment is delayed.
HM Revenue & Customs has offered a more flexible approach for businesses, allowing them to defer VAT payments during Covid-19, but there is no blanket exemption for all businesses.
HMRC instead determines what qualifies as a “reasonable excuse” for late filing and payment.
Businesses that have outstanding payments deferred between 20 March and 30 June 2020 must either join the new payment scheme by 21 June or pay in full by 30 June. If they fail to do so, they may be charged a five per cent penalty or interest.
Companies are required to file and pay their VAT at the same time, meaning the majority that missed the filing deadline are likely to have paid late as well.
This increases their chances of being hit with a fine and could add to other bills accumulated during Covid, including deferred rent and repayments on emergency loan schemes.
“For businesses that have filed their VAT returns late, it’s only a matter of time before the harsh reality of receiving a penalty kicks in,” said Sean Glancy, partner at accountancy firm UHY Hacker Young, which compiled the figures.
“HMRC will impose penalties even if VAT bills are paid one day late, demonstrating the importance it places on businesses paying on time.
“Businesses shouldn’t take HMRC’s more sympathetic approach during the pandemic as a free pass. Where possible, they should try to keep on top of their VAT bills, as there’s no guarantee HMRC will accept their excuse for filing or paying late.”