Andrew Needham explains how submitting a VAT return late incurs a penalty but that a business can avoid it if it has a reasonable excuse.
If a business is late with its VAT return and/or payment, it will fall into the surcharge liability regime (contained in VATA 1994, s 59). The first late return results in the issue of a surcharge liability notice (SLN).
If there is a subsequent late return within 12 months, the following penalties apply:
- 2% of the unpaid tax (minimum £30);
- for a second default in the next 12 months - 5% (minimum £30);
- from then on - by 5% a time, to a maximum of 15% (minimum £30).
If a business’s turnover is less than £150,000 per annum, the second late return
