What consequence does a business face if it submits its first VAT return late?

When a business submits its first VAT return late, it faces a placement into a surcharge liability notice period. This occurs because the VAT system is designed to ensure compliance and accountability among businesses that are registered for VAT. By entering this notice period, the business is effectively alerted to the importance of timely submissions and is under scrutiny for its future compliance.

Being in this notice period means that if the business submits another late return within the specified time frame, it may incur a VAT surcharge. This process incentivizes prompt submissions and acts as a deterrent against future late filings. Therefore, the consequence of being placed in a surcharge liability notice period underscores the significance of adhering to VAT return deadlines, as it can lead to additional penalties if not addressed properly.

The other potential consequences, such as immediate audits, cancellation of business registration, or exemptions from future surcharges, do not align with the typical framework of VAT compliance and penalties established by tax authorities for initial late submissions.