HM Revenue and Customs (HMRC) has begun contacting tax agents with multiple overdue VAT returns, urging resolution of outstanding filings by 7 February 2026. Agents failing to comply could face punitive measures, including suspension of their agent codes and further statutory action.
This move underscores HMRC’s focus on upholding strict compliance standards among tax professionals and reinforces its expectations under HMRC’s standard for agents, which require practitioners to ensure their own tax affairs are up to date.
HMRC action against agents with late VAT returns
Agents who are VAT-registered must submit VAT returns for each prescribed period, irrespective of whether any VAT is due or reclaimable. HMRC recently issued formal correspondence to those with at least two overdue returns, outlining the steps for resolution and stressing the importance of adherence to tax responsibilities.
The letters remind agents that their conduct is subject to the HMRC standard for agents. Under these standards, agents are required to maintain correct and current tax affairs, reinforcing their role in maintaining the integrity of the wider tax system.
Compliance requirements for VAT-registered agents
HMRC’s communication instructs agents to submit all overdue VAT returns and settle any outstanding VAT liabilities by the stated deadline. Failure to pay VAT on time will result in the application of statutory interest, along with surcharges and penalties, in accordance with relevant legislation.
Where agents cannot settle their VAT liability in full, HMRC advises contacting its office to discuss payment arrangements. The standard for agents also clarifies that all VAT-registered businesses and professionals must file returns even if a nil return applies to maintain proper registration status and demonstrate ongoing compliance.
Deadlines and potential consequences for non-compliance
The 7 February 2026 deadline is critical. HMRC has outlined a range of consequences for those failing to resolve their VAT return backlog by this date. These include suspension of agent codes, which would prevent access to HMRC systems and restrict the agent’s ability to act on clients’ behalf.
Additionally, HMRC may consider reporting agents to their professional body in the public interest. Central assessments currently on file may be reviewed, and revised VAT assessments issued where HMRC deems original figures to be underestimated.
Central assessments, also known as notices of assessment of tax, are statutory instruments applied when a VAT return is not filed by the deadline.
Processes for agents ceasing to trade
Agents who have ceased trading are required to cancel their VAT registration using established procedures. Before deregistering, all outstanding VAT returns including a final return must be filed.
HMRC does not permit cancellation of VAT registration from a retrospective date; returns must be kept current up to the official deregistration date. Failure to complete these steps could leave former agents exposed to follow-up action and late filing penalties.
Support for agents facing difficulty
HMRC encourages agents unable to pay VAT liabilities in full to seek immediate assistance through contacts provided in the official correspondence. Early engagement may allow the negotiation of payment arrangements, potentially mitigating penalty charges.
Additional support is available to tax professionals through organisations offering financial, legal, or emotional advice. Services such as Caba provide confidential assistance to members and their dependants, aiming to support individuals facing professional challenges and related pressures.
Final Summary
HMRC’s recent initiative targeting tax agents with outstanding VAT returns underlines the importance of timely compliance and the significant risks associated with unresolved tax affairs.
Agents have been instructed to clear backlogs and satisfy their liabilities by early February 2026, or face a range of disciplinary measures, including loss of HMRC system access or referral to professional bodies. Support channels remain open for those facing payment challenges, stressing the value of proactive engagement to resolve issues.
This development highlights ongoing efforts to enhance professional standards and maintain robust oversight within the UK tax profession. For updates on compliance deadlines and VAT enforcement, the Pie app provides access to the latest guidance and sector news.
