VAT and Excise Penalities

How RIFT Accounting Can Help

If you file a late VAT return or pay late, HMRC calls it a "default" and you may move into a "surcharge period". If you default again during this time, your surcharge period will be extended and you'll face extra charges on top of the VAT you already owe.

Find out if you need to register for VAT with our quick quiz.

These surcharges will be a percentage of the amount you owe, which HMRC will estimate if you haven't sent them your records. They'll base their assessment on your turnover and how serious your default is, from 2% to 15%.

They can also charge you between 15% and 100% of the unpaid amount for submitting an inaccurate VAT return, so make sure you keep your books up-to-date!

As well as helping you with any penalties you already have, VAT returns are something we can take care of for you on an on-going basis, offering VAT advice so you never have to face a penalty. We will ensure you are registered for the most appropriate VAT scheme for your business type and there is even a dedicated module in our Clear Books software that lets you clearly see the VAT calculations.

VAT and Excise Wrongdoing Penalty

This penalty has applied since April 2010 to anyone who is, or should be, registered for VAT or Excise. It also applies to members of the general public, and comes into play if you:

  • Issue an invoice that includes VAT that you're not entitled to charge.
  • Handle goods on which Excise Duty has not been paid or deferred.
  • Use a product in a way that means more Excise Duty should have been paid.
  • Supply a product at a lower rate of Excise Duty, knowing that it will be used in a way that means a higher rate of Excise Duty should be paid.

HMRC will calculate this in a similar way to the penalties for submitting an inaccurate report. Once again, it may be possible to reduce the severity if you let HMRC know about the wrongdoing yourself, and help them clear it up. If RIFT Accounting is acting as your agent with HMRC we can make sure these situations never arise, or negotiate with HMRC to limit the damage if it's already too late.

VAT is a thorny and complicated issue that certainly requires VAT advice. Protecting you from its dangers is all part of the RIFT Accounting Business Bodyguarding service, so let us take the weight off your shoulders and get you back to business. Call now, and we'll ride to the rescue.

Call us on 01233 653006 and see how we can help you today.

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