Accounting for VAT: due date for returns and payments
The standard deadline for submitting a VAT return is provided by regulation 25(1) of the VAT Regulations 1995, and is the last day of the month following the end of the return period. For annual returns it is the last day of the second month following the end of the return period.
For online returns, the standard deadline is extended by seven calendar days (except for Payment on Account and Annual Accounting businesses). This extension is an incentive to encourage compliance with the requirement to pay online returns electronically. The extended due date will be shown on online returns, and also applies to online returns where payment is not required (nil or repayment returns). The legal basis for this extension to due date is a Direction made under regulations 25A (20) and regulation (40)(3) and (4) VAT Regulations 1995.
Due date for payment
Regulation 40(2) of the VAT regulations provides that payment must be made no later than the due date for the VAT return, and regulation 40(4) gives the Commissioners a power to make Directions allowing extra time to pay where payment is made electronically. The due date for online returns is extended by seven calendar days (except for Payment on Account or Annual Accounting businesses) and any associated electronic payment must clear to HMRC’s bank account by the extended due date. Note, however, the following points:
- Payments by online Direct Debt are collected a further three bank working days after the extended deadline for the return
- Payments by the Faster Payment service can be received on bank holidays and weekends
- Any payment made by cheque in the post does not qualify for the seven-day extension and the payment will be late if it does not clear HMRC’s bank account by the standard due (even though the extended deadline is shown on an online return). This is because the extended due date shown on an online return presupposes that the return will be paid electronically (in accordance with the regulations) or it will be a nil or repayment return.
- If a business is exempt from submitting online returns (see VATAC1200) their paper return may qualify for the seven-day extension to due date if the associated payment is made electronically. However, nil or repayment paper returns do not qualify for the extension and must be received by standard due date.
The legal provisions for these rules are in regulation 40(2) (3) and (4) and a Direction made under regulation 40(3).