What Happens If HMRC Rejects My VAT Return

Introduction

Under the Making Tax Digital (MTD) system, most VAT returns are filed electronically through accounting software connected to HMRC. While digital filing makes the process faster, mistakes in your data or software setup can cause your VAT return to be rejected.

A rejected VAT return means HMRC has not accepted your submission. It is not considered received, so you could face late filing penalties if the issue is not corrected promptly.

Common reasons why HMRC rejects VAT returns

There are several reasons HMRC may reject a VAT return. Most relate to administrative or technical problems rather than deliberate errors.

1. Incorrect VAT registration details

If your VAT number, registration date, or business name does not match HMRC’s records, your return may be rejected automatically. Even a small formatting error, such as a missing character, can cause rejection.

Always ensure that the information in your accounting software exactly matches the details on your VAT registration certificate.

2. Invalid accounting period

Your software must use the correct VAT accounting period set by HMRC. If you attempt to file for the wrong period (for example, overlapping or missing months), HMRC will not accept it.

3. Technical submission errors

Sometimes the rejection is caused by a connection problem between your accounting software and HMRC’s MTD system. This could be due to:

Software not being MTD-compatible.

Internet connection problems during submission.

Outdated or expired API authorisation between HMRC and your software.

You may need to reconnect or reauthorise your software before resubmitting the return.

4. Figures not formatted correctly

VAT return figures must be entered as whole numbers (without decimals or symbols). If your software sends figures in the wrong format, HMRC’s system may reject the submission.

5. Missing or incorrect digital links

Under Making Tax Digital, all VAT figures must flow from source records (like sales and purchase data) through digital links to your VAT return. If you copy figures manually or use disconnected spreadsheets without bridging software, HMRC can reject the return for non-compliance.

6. Late submission

If you attempt to file your VAT return after the deadline, HMRC may reject it. You will need to pay any late penalties and submit the return again as soon as possible.

What happens when HMRC rejects your VAT return

When HMRC rejects a VAT return, you will receive an error message through your accounting software or email. The message will include:

A rejection code or message explaining the reason.

Instructions for correcting the issue.

Confirmation that the VAT return has not been received.

Because the return is not accepted, HMRC treats it as not filed, meaning your VAT submission deadline still applies. You must correct the issue and resubmit your return before the deadline to avoid penalties or interest.

If the deadline has already passed, contact HMRC to explain the problem and show evidence that you attempted to submit on time.

How to fix a rejected VAT return

Step 1: Check the rejection message

Review the rejection message from HMRC carefully. The message should include an error code or explanation that helps identify the issue. Common codes include mismatched VAT numbers, invalid period dates, or software connection failures.

Step 2: Correct the error in your accounting software

Depending on the cause:

Update your VAT registration details if they are incorrect.

Adjust the VAT period in your settings.

Reconnect your software to HMRC’s MTD system.

Reformat your VAT figures or remove invalid characters.

If your software is not MTD-compliant, you may need to upgrade or use bridging software to meet HMRC’s requirements.

Step 3: Resubmit the VAT return

Once you have corrected the issue, resubmit your VAT return using your accounting software. Check for confirmation that the submission has been successfully received by HMRC.

Keep a copy of the confirmation message or receipt for your records.

Step 4: Contact HMRC if you cannot resolve the problem

If your return continues to be rejected or your software does not provide a clear error explanation, contact HMRC’s VAT helpline. They can verify your registration details and help identify whether the issue is on their system or with your software.

Having your VAT number, accounting period dates, and rejection message ready will help HMRC resolve the issue faster.

How to avoid VAT return rejections in the future

Double-check that your VAT registration number, business name, and accounting period match HMRC records.

Use MTD-compatible software that links directly to HMRC’s system.

Ensure your API authorisation is current and renewed regularly.

Review VAT figures before submission to avoid input errors.

Submit returns early to allow time to fix any technical problems.

Regular reconciliation of your accounts also helps catch issues before they affect your VAT return.

Example scenario

A small construction firm submits its VAT return through accounting software, but HMRC rejects it with the message “Invalid VAT period.” The company realises it entered April June instead of March May as the VAT quarter. After correcting the period dates and resubmitting, the return is accepted successfully.

Because the error was fixed quickly and the resubmission was before the deadline, no penalty was applied.

Penalties for late or missing VAT returns

If you do not correct and resubmit a rejected VAT return before the deadline, HMRC will treat it as a missed return. This can result in:

Late submission penalties under the points-based system.

Interest charged on unpaid VAT.

Potential compliance checks or investigations.

HMRC is generally understanding if you can show that a technical error caused the rejection and that you acted promptly to resolve it.

Record keeping after rejection

Keep documentation showing:

The original rejection message.

The steps you took to fix the issue.

The confirmation of successful resubmission.

Maintaining this paper trail can protect you if HMRC later queries your compliance.

Common mistakes that trigger rejections

Using the wrong VAT period or VAT number.

Submitting returns using software that is not linked to HMRC.

Missing mandatory fields in your VAT data.

Attempting manual uploads that bypass MTD digital links.

Submitting decimals or symbols in numeric fields.

Reviewing your software settings before submission can prevent most of these issues.

Conclusion

A rejected VAT return can cause stress, but it is usually a technical or data-related issue rather than a serious compliance failure. HMRC will not accept your return until the problem is corrected, so it is essential to identify the cause quickly and resubmit.

By keeping your VAT records accurate, ensuring your software is MTD-compatible, and submitting returns early, you can avoid most rejections and remain fully compliant with HMRC’s VAT rules. If you are unsure about the rejection reason, contacting HMRC or seeking advice from an accountant is the fastest way to resolve the problem and keep your VAT submissions on track.