Skip to content
Kintsugi
Book a DemoSign Up

Kintsugi Notice Hub

United Kingdom VAT notices

Got a letter from HM Revenue & Customs (HMRC)? Find it below to see what it means, why businesses usually receive it, and what to do next.

Sources checked

Tax authority

HM Revenue & Customs (HMRC) (opens in a new tab)

Official notice guide (opens in a new tab)

Disagree with a notice?

For VAT (an indirect tax), HMRC offers a statutory review in the decision or penalty letter. You can accept the review or appeal straight to the First-tier Tribunal (Tax). A review is done by an HMRC officer who was not involved in the decision and usually takes 45 days. If you disagree with the review result, you can appeal to the tax tribunal. For late submission and late payment penalties (VAT periods starting on or after 1 January 2023), the quickest way to accept a review is through your VAT online account. HMRC will not collect disputed VAT while a review is under way, but you usually have to pay the tax before the tribunal hears an appeal unless HMRC accepts a hardship application.

Deadline: Usually 30 days from the date of the decision or penalty letter to accept the review or appeal to the tax tribunal. You must ask for any extension to the review deadline within 30 days of the offer. After a review, you usually have 30 days from the review result letter to appeal to the tribunal. Late appeals need a reasonable excuse or the tribunal's permission.

Source: HM Revenue & Customs (HMRC) (opens in a new tab)

Failure to file

The authority has no return on record for a period it expects one, often because an account is open but filings stopped.

Failure to file

VAT — missing return

A letter, which may come with a text or email, telling you that HMRC's records show 2 or more VAT Returns have not been submitted. It asks you to file the outstanding returns and explains what may happen if you do not.

Why you got it

  • HMRC's records show 2 or more VAT Returns have not been submitted
  • The business may no longer need to submit VAT Returns but is still shown as registered

What to do

  1. Check on GOV.UK which VAT Returns are missing and submit them online
  2. If you no longer need to submit VAT Returns, follow the letter's instructions for that situation
  3. If you have already submitted the returns, you do not need to do anything
  4. Do not give bank details or pay by text message. HMRC says these messages will never ask for this

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Check genuine HMRC contact that uses more than one communication method (opens in a new tab)

Penalty & interest

Charges added for filing or paying late, or for underreporting.

Penalty & interest

Late submission penalty point and £200 late submission penalty (penalty decision letter)

For VAT periods starting on or after 1 January 2023, you get a penalty point for each VAT Return you submit late, including nil and repayment returns. When you reach the points threshold for your filing frequency (annual 2, quarterly 4, monthly 5), HMRC charges a £200 penalty, and another £200 for each later late return while you stay at the threshold. HMRC tells you about each point or penalty in a penalty decision letter.

Why you got it

  • A VAT Return (including a nil or repayment return) was submitted after the deadline
  • Late returns built up points until the threshold was reached, so a £200 penalty was charged

What to do

  1. Check your penalty points and penalties in your VAT online account against your filing dates.
  2. Submit any outstanding returns and file future returns on time. Points can be removed after a period of on-time filing, once all returns for the previous 24 months are in.
  3. If you had a reasonable excuse (for example serious illness, a bereavement or a software failure), or think the point or penalty is wrong, accept the review offered in the letter, usually within 30 days. You can do this online or by writing to HMRC Solicitor's Office and Legal Services, BX9 1ZT. You can also appeal to the tax tribunal.

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Penalty points and penalties if you submit your VAT Return late (opens in a new tab)

Penalty & interest

Late payment penalty (penalty decision letter)

For VAT periods starting on or after 1 January 2023, HMRC charges a penalty when VAT is not paid in full by the due date. The first penalty is 3% of what was unpaid at day 15, plus 3% of what is still unpaid at day 30. From day 31, a second penalty builds up daily at 10% a year. Late payment interest (Bank of England base rate plus 4%) is also charged from the first day the payment is overdue.

Why you got it

  • VAT shown on a return, an amended return, or an HMRC VAT assessment was not paid in full by the due date
  • A Time to Pay arrangement was cancelled because its conditions were not kept

What to do

  1. Pay the VAT as soon as possible, or ask the Payment Support Service for a Time to Pay arrangement. HMRC says this can mean lower or no late payment penalties.
  2. Check how the penalties and interest were worked out in your VAT online account.
  3. If you had a reasonable excuse, accept the review offered in the penalty decision letter, usually within 30 days, or appeal to the tax tribunal.
  4. You cannot appeal late payment interest. Once the VAT is paid, you can object if an HMRC mistake or unreasonable delay caused it, or if you dispute the payment date.

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: How late payment penalties work if you pay VAT late (opens in a new tab)

Penalty & interestCC/FS7a

Penalty for inaccuracies in returns or documents (factsheet CC/FS7a)

A penalty HMRC may charge when a VAT Return or other document is wrong because of carelessness or a deliberate act, and this leads to tax being underpaid or over-claimed. The penalty is a percentage of the potential lost revenue: 0% to 30% for careless errors, up to 70% for deliberate ones, and up to 100% for deliberate and concealed ones. It is lower when you disclose unprompted and cooperate.

Why you got it

  • A compliance check found an inaccuracy caused by carelessness (not taking reasonable care) or a deliberate act
  • An error was corrected only after HMRC found it (prompted disclosure)

What to do

  1. Tell HMRC everything about the error and help work out the correct tax. The quality of your disclosure reduces the penalty.
  2. If you took reasonable care, or there are special circumstances, explain this to the officer. No penalty applies where you took reasonable care.
  3. For a careless inaccuracy, ask whether the penalty can be suspended. HMRC can suspend it for up to 2 years if it can set conditions you can meet, and you won't have to pay it if you meet them.
  4. If you disagree with the penalty decision, follow the letter's instructions to ask for a review or appeal, usually within 30 days.

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: Compliance check series — CC/FS7A: Penalties for inaccuracies in returns and documents (opens in a new tab)

Penalty & interestCC/FS11

Penalty for failure to notify (late VAT registration) (factsheet CC/FS11)

A penalty HMRC may charge if you did not tell it on time that you had to register for VAT. For example, you must tell HMRC within 30 days of going over the VAT registration threshold. The penalty is a percentage of the potential lost revenue. It depends on whether the failure was deliberate and whether you disclosed it before HMRC found it (0% to 30% for non-deliberate failures).

Why you got it

  • Taxable turnover went over the VAT registration threshold and HMRC was not told within 30 days
  • HMRC found the business should have registered earlier (it will register you from the correct effective date and collect VAT back to that date)

What to do

  1. Register for VAT and account for VAT on sales from the date you should have been registered
  2. Tell HMRC everything about the failure and help work out the tax, which reduces the penalty
  3. If you had a reasonable excuse and told HMRC without unreasonable delay once it ended, explain this. No penalty applies in that case if the failure was not deliberate
  4. If you disagree, within 30 days you can send new information, ask for a review, or appeal to the tribunal

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: Within 30 days of HMRC's appealable decision: send new information, ask for a review, or appeal to the tribunal

Source: Compliance checks — penalties for failure to notify — CC/FS11 (opens in a new tab)

Assessment

A proposed or final determination of tax owed, sometimes estimated when returns were never filed.

Assessment

VAT notice of assessment of tax (central assessment)

If you miss the deadline for a VAT Return, HMRC sends a notice telling you how much VAT it thinks you owe for that period. HMRC's internal manuals call this a central assessment. It becomes the debt HMRC chases.

Why you got it

  • A VAT Return was not received by the due date

What to do

  1. If the assessment is too high, send a correct VAT Return and pay any VAT due
  2. If the assessment is too low, tell HMRC within 30 days or send a correct return and payment, otherwise you may be charged a penalty of up to 30% of the assessment.
  3. Late submission and late payment penalties and interest apply separately. If you had a reasonable excuse, challenge those penalties through the review offered in the penalty letter.

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: If the assessment is too low, tell HMRC within 30 days (or send a correct return and payment) to avoid a penalty of up to 30% of the assessment

Source: Sending a VAT Return: Late returns and payment (opens in a new tab)

AssessmentVAT655

Notice of Assessment (officer's assessment)

A formal notice that an HMRC officer has assessed extra VAT (or corrected an over-declaration), usually after a compliance check finds that returns were wrong. It shows the tax and interest assessed for each period. It is normally preceded by a pre-assessment letter (VAT(LC)15) that explains the proposed figures.

Why you got it

  • A compliance check found that VAT Returns were under-declared or input tax was over-claimed
  • HMRC has evidence of VAT due that was not declared

What to do

  1. If you get a pre-assessment letter first, check the schedule of calculations and send any evidence or corrections before its deadline, which is normally 21 days.
  2. Check the periods, amounts and interest on the notice against your records.
  3. If you agree, pay or ask for a Time to Pay arrangement. If you disagree, accept the review or appeal to the tax tribunal, usually within 30 days. HMRC waits about 30 days for an appeal before it starts collecting an officer's assessment.

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Response window: Pre-assessment letter: normally 21 days to respond (per HMRC manual VAEC6030)

Source: VAEC6550 - VAT assessment forms: Production of VAT655 (opens in a new tab)

Audit

A request for records or notice that the authority is examining your returns.

AuditCC/FS1a

Compliance check letter (with factsheet CC/FS1a 'About compliance checks')

A letter or call telling you HMRC has started a compliance check of your VAT position. It usually comes with factsheet CC/FS1a. HMRC may ask for information or documents, ask for a meeting, or ask to visit your premises to inspect records.

Why you got it

  • HMRC wants to check your VAT Returns or claims
  • HMRC wants to confirm that the right VAT is being paid at the right time

What to do

  1. Send the information or documents asked for, and tell the officer if you need more time or if a request seems unreasonable
  2. Keep filing returns and paying VAT on time while the check is going on
  3. If you know something is wrong, tell the officer straight away. Full cooperation reduces any penalty
  4. Do not ignore a formal information notice (see factsheet CC/FS2). Consider getting a professional adviser

Source: About compliance checks — CC/FS1a (opens in a new tab)

Audit

One to many (OTM) letter

A 'nudge' letter, email or text that HMRC sends to many businesses at once when its data suggests a common compliance risk. It encourages you to review your tax affairs and correct any errors. On its own it is not a compliance check. If HMRC wants you to provide information, it must either open a formal compliance check or make clear that giving the information is voluntary.

Why you got it

  • HMRC wants to address a compliance risk that affects a group of businesses
  • HMRC is running a campaign to promote compliance in a sector or activity

What to do

  1. Read the letter carefully and check the specific issue it describes in your VAT records
  2. If you find an error, correct it or make a disclosure. Unprompted disclosures generally attract lower penalties
  3. Check whether the letter asks for information voluntarily or is opening a formal compliance check
  4. If unsure the letter is genuine, check HMRC's list of genuine contacts

Source: CH600120 - The One to Many Approach: introduction: what is one to many? (opens in a new tab)

Nexus inquiry

A questionnaire or letter asking about your activity in the jurisdiction to decide whether you must register.

Nexus inquiry

Overseas businesses that sell digital services to UK consumers (UK VAT obligations letter)

A letter and email that HMRC may send to overseas businesses selling digital services to UK consumers about their UK VAT obligations. It explains why HMRC is contacting you and asks you to get in touch. Businesses based outside the UK (non-established taxable persons) must register for UK VAT whatever their turnover if they make taxable supplies in the UK.

Why you got it

  • An overseas business sells digital services to UK consumers
  • HMRC wants to tell the business about its UK VAT obligations

What to do

  1. Contact HMRC as the letter asks
  2. Check whether you must register as a non-established taxable person. The UK VAT threshold does not apply to NETPs
  3. If you are liable, register and account for UK VAT from the date the liability arose
  4. Do not send personal, business or financial information in reply. HMRC says this contact will not ask for it

Source: Check genuine HMRC contact that uses more than one communication method (opens in a new tab)

Registration

Changes to your permit or account: required registration, filing-frequency changes, revocation, or closure.

RegistrationVPCF1

Letter VPCF1 — decision to cancel your VAT registration

As part of its VAT registration security checks, HMRC may write to say it intends to cancel (deregister) your VAT registration because it believes you are not eligible, for example because it doubts your intention to trade. If you do not send the information HMRC asks for within 30 days, HMRC will deregister the business.

Why you got it

  • HMRC's registration security checks question whether the business intends to make taxable supplies
  • HMRC believes the business is not eligible to be VAT registered

What to do

  1. Send the information and documents HMRC asks for within 30 days to show you are eligible
  2. Only send information through channels HMRC gives you. Requests to email addresses not ending in 'hmrc.gov.uk' are not genuine
  3. Call the VAT general enquiries helpline if you need help or are unsure the letter is genuine

Response window: 30 days to send information showing you are eligible for registration, otherwise HMRC will deregister the business

Source: Check if a letter you’ve received from HMRC is genuine (opens in a new tab)

Registration

Making Tax Digital for VAT exemption decision letter

All VAT-registered businesses must follow Making Tax Digital for VAT: they must keep digital records and file VAT Returns using compatible software, unless they are exempt. If you apply for an exemption, HMRC sends a letter with its decision. If it agrees, the letter explains how you should send your VAT Returns.

Why you got it

  • The business applied for an exemption because it is not reasonable or practical to use computers, software or the internet (for example because of age, health, disability, location, or religious grounds)

What to do

  1. Keep sending returns as you usually do until you receive HMRC's decision letter
  2. If the exemption is granted, send returns the way the letter explains
  3. If it is refused, follow Making Tax Digital for VAT and use compatible software to keep records and file returns. HMRC signs businesses up automatically

Source: Applying for an exemption from Making Tax Digital for VAT (opens in a new tab)

Collections

Enforcement on unpaid balances, such as liens, levies, warrants, or referral to a collection agency.

Collections

Notice of enforcement (taking control of goods)

If you do not engage with HMRC about an unpaid tax debt, HMRC can use enforcement powers as a last resort. In England and Wales it first issues a formal notice of enforcement, which costs £75. An officer can then visit, list goods to be sold, and ask you to sign a controlled goods agreement. Other options include debt collection agencies, recovering money directly from bank accounts, court action and insolvency proceedings.

Why you got it

  • HMRC could not contact you about an overdue tax debt, or you refused to pay
  • A debt collection agency returned the debt to HMRC without it being settled

What to do

  1. Contact HMRC (the Payment Support Service) straight away to pay or agree a Time to Pay arrangement
  2. If an officer visits, you can pay in full or in part, or agree instalments. Personal debit cards carry no fee
  3. If you sign a controlled goods agreement, do not sell or give away the listed goods, and pay by the deadline in the agreement
  4. Contact HMRC if you disagree with the amount of the debt

Before you pay penalties: check whether you can ask for them to be waived, and what the state needs paid first. How to ask

Source: What will happen if you do not pay your tax bill (opens in a new tab)

Ask for penalty relief

Penalties on a United Kingdom notice aren't always final. You can ask for them to be waived. Follow the steps below, including anything the state requires you to file or pay before it reviews the request.

Challenging a VAT penalty (reasonable excuse): HMRC review or tax tribunal appeal

  1. To stop more points or penalties building up, submit any missing VAT Returns and pay, or ask the Payment Support Service for a Time to Pay arrangement
  2. Within 30 days of the penalty decision letter, accept HMRC's offer of a review. The quickest way is through your VAT online account, or write to HMRC Solicitor's Office and Legal Services, BX9 1ZT, saying which penalty you are challenging and why
  3. Explain your reasonable excuse and send the return or payment as soon as you are able to
  4. If the review does not go your way, or instead of a review, appeal to the tax tribunal

What qualifies: A reasonable excuse, for example a close relative's death shortly before the deadline, an unexpected hospital stay, serious illness, computer or software failure, HMRC online service issues, fire, flood or theft, or unpredictable postal delays. Not having enough money, finding HMRC online systems difficult, not getting a reminder, or making a mistake on the return do not count. Careless inaccuracy penalties can also be suspended for up to 2 years if HMRC can set conditions you can meet.

Interest: You cannot appeal VAT late payment interest. You can object if an HMRC mistake or unreasonable delay contributed to it, you dispute the payment date, or you question the legislation, but HMRC only accepts an objection once the tax is fully paid.

Source: Disagree with a tax decision or penalty: Disagree with a penalty (GOV.UK) (opens in a new tab)

Before you respond

  • Check the date on the notice. Response windows usually run from that date, not the day you open it.
  • Match the account number and filing period to your own records before paying or disputing.
  • If returns are missing, filing the actual returns usually replaces an estimated bill. Confirm how on the notice or with the authority.
  • Ask about penalty relief before paying penalties, and check what must be paid with the request. See how
  • Keep a copy of the notice and everything you send back.

This page is general information, not tax or legal advice. Notice names and procedures change, so always follow the instructions on your notice and the official sources linked above.

Need the rates, nexus thresholds and filing rules? Read the United Kingdom VAT guide.

See how Kintsugi automates VAT compliance.

More notice guides

Free exposure assessment, no commitment.

See what sales tax is really costing you

Book a demoGet started for free

30-minute walkthrough · No credit card required · See your own data live