If you have ever missed a VAT return deadline or submitted a return that turned out to be incorrect you will know exactly how stressful that situation can be. HMRC does not take late or inaccurate VAT returns lightly and the consequences can be serious for your business. The good news is that getting the right professional support in place can fix the problem and make sure it never happens again.

In this blog we are going to talk honestly about what happens when VAT returns go wrong, why so many businesses end up in this situation and how a professional VAT return accountant can help you get back on track and stay there.

Why Businesses Fall Behind on VAT Returns

Let us start by being honest about something. Missing a VAT return deadline or making errors on a return does not always mean a business owner is careless or irresponsible. Life gets in the way. Businesses get busy. Staff changes happen. Systems fail. And sometimes VAT just slips down the priority list when everything else is demanding your attention at the same time.

Some of the most common reasons businesses fall behind on their VAT returns include not having enough time to prepare everything properly before the deadline, confusion about what figures to include and how to calculate them correctly, not keeping records up to date throughout the quarter which means a mad rush at the end, not being aware of changes in VAT rules or Making Tax Digital requirements and simply not having the right accounting software or systems in place.

Any one of these things can lead to a late submission or an inaccurate return. And when that happens the consequences can start to stack up quickly.

What HMRC Does When VAT Returns Are Late

HMRC has a system in place for dealing with late VAT returns and it is designed to get your attention. When you miss a VAT return deadline HMRC issues a notice called a surcharge liability notice. This puts your business on what is known as a surcharge period.

If you miss another deadline while you are in a surcharge period you will be charged a surcharge on the VAT you owe. The longer the pattern continues the higher the surcharge percentage becomes. This means that one missed deadline can quickly turn into a growing financial problem if it is not dealt with promptly.

On top of surcharges there is also interest to consider. If you owe VAT and you pay it late HMRC will charge interest on the amount outstanding. This adds up and puts pressure on your cash flow at exactly the wrong time.

HMRC also has the power to investigate your VAT returns if they believe something is wrong. An investigation can be time consuming, stressful and costly. Even if you have made honest mistakes rather than deliberate ones the process can be a significant disruption to your business.

The Problem With Inaccurate VAT Returns

Late returns are one issue but inaccurate returns are another problem entirely. Many business owners submit their VAT returns on time but without realising that the figures are not quite right. This can happen for all sorts of reasons.

Applying the wrong VAT rate to a sale is a very common mistake. There are different VAT rates in the UK including the standard rate, the reduced rate and the zero rate. On top of that some supplies are completely exempt from VAT. Getting these categories mixed up is easier than you might think especially if your business sells a variety of products or services.

Reclaiming VAT on purchases is another area where errors creep in. Not all VAT on business purchases can be reclaimed and the rules around this can be quite specific. If you reclaim VAT you are not entitled to HMRC will want it back and may charge a penalty on top.

Errors in your VAT returns can also trigger a compliance check from HMRC. Even if the mistakes were completely unintentional you will still need to explain them and potentially pay back any VAT that was underpaid along with interest and penalties.

How a VAT Return Accountant Can Help You Get Back on Track

If you have fallen behind on your VAT returns or you know that your past returns have not been entirely accurate the most important thing you can do right now is get professional help. A qualified VAT return accountant can assess your situation, help you understand exactly where things stand and put together a plan to get everything sorted out.

Here is what a professional VAT return service can do for you in this situation. They will review your past returns and identify any errors or discrepancies that need to be addressed. They will help you make a voluntary disclosure to HMRC if necessary which can significantly reduce the penalties you face compared to waiting for HMRC to find the problem themselves. They will bring your records up to date and make sure everything is properly organised going forward. And they will take over the management of your future VAT returns so that late submissions and inaccurate filings become a thing of the past.

Voluntary disclosure is something worth understanding because it can make a real difference to how HMRC treats you. If you come forward and report errors before HMRC discovers them yourself the penalties are typically much lower. A VAT return accountant can guide you through this process and communicate with HMRC on your behalf so you do not have to deal with it alone.

Preventing the Problem From Happening Again

Getting back on track is one thing but staying on track is just as important. Once a professional VAT return service is managing your VAT obligations you have a much stronger foundation in place.

A good VAT return accountant will set up proper systems for your business so that your records are kept accurately throughout the quarter rather than scrambling to pull everything together at the last minute. They will use Making Tax Digital compatible software to keep your digital records in order and submit your returns directly to HMRC. They will track all your deadlines and make sure everything is submitted on time every single time. And they will review your VAT position regularly to make sure nothing is being missed and that you are not paying more VAT than you need to.

This kind of ongoing support transforms VAT from something that causes stress and anxiety into something that simply gets done correctly in the background while you get on with running your business.

Do Not Wait for HMRC to Come to You

One of the biggest mistakes business owners make when they know their VAT returns are not in order is hoping the problem will go away on its own. It will not. HMRC has systems in place to identify businesses that are not meeting their VAT obligations and the longer an issue is left unresolved the worse it tends to get.

If you know you have missed deadlines or if you are not confident that your past returns have been accurate the time to act is now. Getting a professional VAT return accountant involved at the earliest opportunity gives you the best chance of resolving the situation with the least possible impact on your business.

Do not wait for a letter from HMRC before you take action. Be proactive, get the right support in place and take back control of your VAT position.

Final Thoughts

Late and inaccurate VAT returns are a serious issue but they are also a fixable one. With the right VAT return service behind you, you can resolve any outstanding problems, get your returns back on track and make sure that your business never has to deal with this kind of stress again.

A professional VAT return accountant is not just there for when things go wrong. They are there to make sure things go right every single time. If your VAT returns have not been what they should be do not put it off any longer. Get the right help in place today and give your business the protection and peace of mind it deserves.