Unsubmitted Overdue VAT

A sole trader registered for VAT on 2020 - forgot to submit VAT Returns and at the same time did not charge VAT as per the invoice issued. How can this issue be addressed noting that all VAT are showing as overdue? Can the overdue VAT be submitted as zero to bring the account update or not? Thanks.

Hi Paul Mburu
.If the sole trader was VAT registered then VAT should have been charged from their date of Registration.
This VAT will need to be accounted for and paid over to HMRC as part of a submitted VAT return.
The sole trader can go back to the customers retrospectively to ask for the VAT payment but the customer is not bound to pay this.
Regardless of whether the VAT is paid by the customer the VAT will need to be paid over to HMRC.
Thank you.

If the sole trader is registered for VAT, as HMRC have stated, sales thereafter are subject to VAT/normal VAT rules (ie, some sales might be zero rated if goods are exported from the UK to overseas customers and some supplies might be zero rated if the sole trader is selling childrens clothing or basic foods like bread and milk), otherwise, the sole trader should have been collecting VAT from customers on each sale made. In situations where a VAT registered trader has failed to charge VAT, you would treat sole trader income as gross and extract VAT from the gross turnover and that is declared to HMRC on the outstanding VAT returns. For example if turnover for the year was £100,000 then to find the VAT you multiply by 1 and divide by 6 (£100,000 x 1 / 6 = £16,666 VAT due to HMRC). On the personal tax side, there is an overstatement of income/profit (reflecting the £16k of VAT going to HMRC), so there would likely be a reduction in personal tax liability which might offset some of the VAT liability. If you submit Nil VAT returns knowing sales have been made that are subject to VAT, this would be a deliberate submission of a knowingly inaccurate return and the penalties can be between 20%-70% of the VAT not declared (so the VAT not declared plus a further 20%-70% penalty).