What Happens If HMRC Rejects My VAT Return

Few things worry business owners more than seeing a message that HMRC has rejected their VAT return. It can feel like you have done something fundamentally wrong, especially if you submitted the return on time and believed everything was in order. In practice though, a rejected VAT return is far more common than people realise and in most cases it is procedural rather than punitive.

In this article, I explain what it actually means when a VAT return is rejected, why it happens, what HMRC is really saying, and what you need to do next. I will also cover the difference between a rejected return and a VAT enquiry, how this affects deadlines and penalties, and how to reduce the risk of it happening again. This is written from real UK VAT experience and reflects how these situations play out in practice rather than how people fear they do.

What HMRC Means by Rejecting a VAT Return

When HMRC rejects a VAT return, it does not usually mean they are accusing you of wrongdoing or fraud. In most cases, HMRC is saying that the return could not be accepted by their system in its current form.

A rejection normally means one of three things:

The return failed technical checks

The submission did not meet Making Tax Digital requirements

HMRC needs something corrected before the return can be accepted

It is important to understand that a rejected return is different from an enquiry, an investigation, or an assessment.

Who Rejects VAT Returns

VAT returns are reviewed and accepted by HMRC through automated systems in the first instance. Most rejections are system driven rather than human decisions.

This is why the rejection message often feels vague or technical. The system is flagging something it cannot process or validate, not making a judgement call about your business.

The Most Common Reasons VAT Returns Are Rejected

Over the years, I have seen patterns in why VAT returns are rejected. Understanding these reasons helps remove a lot of the anxiety.

Making Tax Digital Issues

The most common reason for rejection is a Making Tax Digital problem.

This can include:

Submitting the return outside MTD compliant software

Broken digital links between records and submission

Using spreadsheets without bridging software

Authorisation issues between software and HMRC

Under MTD rules, HMRC will reject VAT returns that do not meet digital submission requirements.

Incorrect Government Gateway or Authorisation

Another frequent issue is authorisation failure.

This can happen if:

The VAT account is not properly linked to the software

An agent authorisation has expired

The wrong VAT number is being used

A new VAT registration has not been fully activated

In these cases, HMRC is rejecting the submission because it cannot verify who is submitting it.

Duplicate VAT Return Submission

If a VAT return has already been submitted for that period, HMRC will reject any further attempts to submit another return for the same period.

This often happens when:

A return was submitted but confirmation was missed

Someone else submitted the return

The software resubmits in error

HMRC will only accept one return per period unless a correction process is followed.

Incorrect VAT Period or Dates

VAT returns are tied to specific periods.

If the return being submitted does not match the open VAT period, HMRC will reject it.

This can happen if:

The wrong quarter is selected in software

Dates are entered manually and incorrectly

A change to VAT periods has not been updated

This is a surprisingly common cause of rejection.

Invalid or Extreme Figures

While HMRC does not usually reject returns based on size alone, extreme or illogical figures can trigger rejections.

Examples include:

Negative figures where they are not allowed

Box totals that do not reconcile logically

Missing required box values

These checks are often basic validation rules rather than suspicion of wrongdoing.

VAT Account Issues

Sometimes the problem is not the return at all, but the VAT account itself.

This can include:

VAT registration being cancelled or suspended

Incorrect business details on the VAT account

Changes not yet processed by HMRC

In these cases, HMRC may reject submissions until the account issue is resolved.

What a Rejection Message Usually Looks Like

HMRC rejection messages are rarely written in plain English.

They often include:

Error codes

Short technical descriptions

References to authorisation or digital links

While frustrating, these messages usually point towards the category of problem rather than the exact fix.

The key is not to panic or resubmit repeatedly without understanding the issue.

What Happens to Deadlines If a VAT Return Is Rejected

This is one of the most important practical questions.

A rejected VAT return is treated as not submitted.

That means:

The VAT return is still outstanding

The filing deadline still applies

Late filing penalties can still arise

If the deadline passes and the return has not been accepted, HMRC can treat it as late, even if you attempted to submit it.

This is why prompt action after a rejection is critical.

Does a Rejected VAT Return Automatically Trigger Penalties

Not automatically, but the risk increases if the issue is not resolved quickly.

HMRC’s penalty system looks at:

Whether the return was submitted and accepted by the deadline

Whether payment was made on time

Whether there is a pattern of non compliance

If a return is rejected but corrected and accepted before the deadline, penalties are unlikely.

If the return remains unaccepted after the deadline, penalties and interest can apply.

What You Should Do Immediately After a VAT Return Is Rejected

When a VAT return is rejected, there is a clear sequence of steps I always advise.

Step One: Do Not Resubmit Blindly

Repeatedly resubmitting the same return rarely fixes the issue and can sometimes make things worse.

Stop and review the rejection message first.

Step Two: Identify the Category of Issue

Ask yourself:

Is this an MTD issue

Is this an authorisation issue

Is this a period or date issue

Is this a duplication issue

Once you identify the category, the solution is usually much clearer.

Step Three: Check Software and HMRC Links

For MTD related rejections, check:

That your software is MTD compliant

That digital links are intact

That HMRC authorisation is active

That the correct VAT number is used

Many rejections are resolved at this stage.

Step Four: Check HMRC VAT Account

Log into the VAT account and confirm:

The VAT number is active

The return period is open

No duplicate submission has occurred

Business details are correct

This step is often overlooked but very important.

Step Five: Correct and Resubmit Promptly

Once the issue is identified and corrected, resubmit the VAT return as soon as possible.

Always retain evidence of:

The original submission attempt

The rejection message

The corrected submission

HMRC acceptance confirmation

This evidence can be invaluable if penalties are later queried.

What If the VAT Return Keeps Being Rejected

If repeated rejections occur, it usually means the issue is not with the numbers but with the setup.

At this point, it is often necessary to:

Contact HMRC’s VAT helpline

Review agent authorisations

Reset MTD authorisation links

Switch submission method or software

In stubborn cases, HMRC may need to manually reset something on the VAT account.

Rejected VAT Return Versus VAT Enquiry

It is important not to confuse a rejected VAT return with a VAT enquiry.

A rejected return:

Is usually automated

Focuses on submission validity

Does not examine your figures in detail

A VAT enquiry:

Is opened by an HMRC officer

Examines the accuracy of your VAT

Can involve detailed questions and records

Most rejected VAT returns never progress to enquiries if handled correctly.

What Happens If You Cannot Fix the Rejection Before the Deadline

If it becomes clear that the issue cannot be resolved before the deadline, it is important to manage the situation proactively.

This may involve:

Contacting HMRC to explain the issue

Making a protective VAT payment if possible

Keeping evidence of submission attempts

Seeking professional help quickly

While this does not guarantee penalties will be avoided, it significantly improves your position.

Can HMRC Reject a VAT Return After Accepting It

Once HMRC has accepted a VAT return, it is not later rejected in the same way.

However, HMRC can:

Open an enquiry

Query figures

Assess additional VAT

This is a different process entirely.

Acceptance simply means the return was received and processed, not that HMRC agrees with every figure.

Common Mistakes After a VAT Return Is Rejected

In practice, I see the same reactions cause unnecessary problems.

These include:

Ignoring the rejection and assuming it will fix itself

Missing the deadline while troubleshooting

Resubmitting without understanding the error

Paying VAT without a submitted return

Panicking and changing figures unnecessarily

A calm, methodical response is always more effective.

How Payment Is Affected by a Rejected VAT Return

Submitting a VAT return and paying VAT are separate steps.

If the return is rejected:

HMRC does not yet have an accepted return

Payment may still be due by the deadline

Paying without a submitted return can complicate matters

In most cases, I recommend resolving the submission issue first, unless the deadline is imminent and payment is clearly due.

What If HMRC Rejects a Nil VAT Return

Nil VAT returns are often rejected for the same reasons as non nil returns.

The fact that no VAT is payable does not change:

MTD requirements

Authorisation requirements

Period validation rules

Nil returns must still be submitted correctly and accepted.

How to Reduce the Risk of Rejection in Future

From a practical standpoint, there are several steps that significantly reduce rejection risk.

These include:

Using reliable MTD compliant software

Keeping authorisations up to date

Filing returns early rather than on the deadline

Reviewing VAT periods carefully

Keeping software and HMRC logins aligned

Filing a few days early gives you time to fix issues without penalty pressure.

When I Recommend Professional Help

While many VAT return rejections can be resolved easily, there are times when professional help is sensible.

I usually recommend it when:

Rejections happen repeatedly

Deadlines are imminent

HMRC communication is unclear

Multiple VAT periods are affected

Penalties are at risk

A short intervention at the right time often prevents much bigger problems later.

My Professional View on VAT Return Rejections

In my experience, VAT return rejections are far more about systems and process than about tax errors.

Most businesses that face rejections have done nothing wrong in substance. They have simply fallen foul of technical rules that are not always well explained.

Handled correctly and promptly, a rejected VAT return is usually a temporary inconvenience rather than a serious issue.

Final Thoughts

So, what happens if HMRC rejects your VAT return?

In most cases:

The return has not been accepted

The deadline still applies

The issue needs to be identified and fixed

Resubmission is required

A rejection is not an accusation and not a punishment. It is a signal that something in the submission process needs attention.

The key is to act quickly, stay organised, and not ignore the problem. In my experience, businesses that deal with VAT rejections calmly and methodically almost always get them resolved without lasting consequences.

VAT becomes stressful when it is rushed or misunderstood. When it is handled properly, even a rejection is just another problem to solve rather than something to fear.