What is the penalty for late VAT registration?
Late registration is a “failure to notify”. The penalty is a percentage of the VAT you owe for the late period, and depends on why you were late and whether you told HMRC before it found out.
| Why you were late | You told HMRC first (unprompted) | HMRC found you (prompted) |
|---|---|---|
| Not deliberate, told within 12 months | 0% to 30% | 10% to 30% |
| Not deliberate, told after 12 months | 10% to 30% | 20% to 30% |
| Deliberate | 20% to 70% | 35% to 70% |
| Deliberate and concealed | 30% to 100% | 50% to 100% |
The 12 months run from when the tax first became unpaid, which is the day after your first VAT return would have been due. HMRC’s VAT Notice 700/1 still shows an older table of 5%, 10% and 15%; those rates applied to failures before 1 April 2010. Later failures are charged under Schedule 41 of the Finance Act 2008.
Maximum penalty as a percentage of the VAT due, by behaviour
Can I backdate my VAT registration?
If you were required to register, HMRC backdates your registration to the date you became liable; you don’t choose it. If you are registering voluntarily, you can ask for a date up to 4 years back. See voluntary registration.
Do I have to pay VAT I didn’t charge?
Yes. You must account for VAT on your taxable sales from your registration date, even if you didn’t charge your customers. You may be able to offset VAT on your own costs from that period, if you hold VAT invoices, under the normal rules for VAT paid before registration.
What if I deliberately didn’t register?
If you deliberately avoid registering, the penalty can equal the full amount of VAT you should have paid. For serious cases, HMRC may investigate and bring criminal proceedings.
What should I do now if I’m late?
- Work out your correct registration date. Use the threshold tests, or for overseas businesses the date of your first UK taxable sale.
- Register now. The penalty period runs until HMRC receives your application, and HMRC can register you without your agreement.
- Calculate the VAT due on sales since that date, and the VAT you can reclaim on costs.
- Make a disclosure explaining what happened, so the penalty reflects that you came forward.
- Reissue invoices to VAT-registered customers where you can, so they can reclaim the VAT.
Common scenarios
“I missed my VAT registration deadline by 6 months. What penalty will I pay?”
If the failure wasn’t deliberate and you tell HMRC before it contacts you, the penalty can be reduced to 0%, because you are within 12 months of the tax first becoming unpaid. If HMRC finds you first, the minimum is 10%. You also owe the VAT itself from your registration date.
“We’re an overseas seller and didn’t know there was no threshold.”
You were liable from your first UK taxable sale. HMRC can also direct you to appoint a tax representative or pay a security, and marketplaces can remove sellers who should be registered. Register now and disclose.
“My customers are all VAT-registered businesses.”
You still owe the VAT from your registration date. If your customers accept VAT invoices for past sales, they can usually reclaim it, which softens the cost.
Already late? We can file your registration and a disclosure.
We work out your correct date, calculate what’s owed, register you and write the disclosure to HMRC.
Frequently asked questions
Does HMRC always charge a late registration penalty?
HMRC may charge one whenever you tell it late. You may be able to reduce it by coming forward before HMRC contacts you, or if you have a reasonable excuse.
Can I appeal a late registration penalty?
Yes. You can ask HMRC for a review or appeal to the tax tribunal if you disagree with the penalty or have a reasonable excuse.
Will HMRC find out if I don’t register?
HMRC uses data from marketplaces, payment providers and other sources, and can register you without your agreement. Registering voluntarily and disclosing is almost always cheaper.
Is the penalty calculated on turnover or on VAT?
On the net VAT due for the late period, not on your turnover.
Related guides
Sources
- HMRC VAT Notice 700/1, sections 4.6 and 14
- HMRC factsheet CC/FS11: Penalties for failure to notify
- HMRC Compliance Handbook CH73200: failure to notify penalty ranges
General information based on HMRC guidance as at 27 September 2026, not advice for your situation. Rules change and depend on your facts. Talk to us before acting.