VAT penalties regime has changed, read on for more information…
From 1 January 2023 , new VAT late submission and payment penalties apply which replaces the default surcharge for VAT. Under the new rules , late payment and filings of VAT will be treated separately.
Lets look firstly at payment of VAT
- Payments that are up to 15 days late will not trigger any penalty regardless of the number of occurrences.
- Payments between day 16 and day 30 will incur a penalty of 2% of the outstanding liability at day 15 (However, HMRC will not apply this rule until 2024 to help businesses with the transition).
- Payments that are 31 days late or more will trigger a 2% penalty at day 15 plus an additional 2% penalty on the amount outstanding on day 31. (So 4% if nothing has been paid).
- Also, from day 31, there will be a daily penalty (4% per annum) on the amount outstanding. (e.g. a VAT liability left unpaid for 13 months will have triggered a total of 8% in tax penalties).
- Interest on overdue tax will continue to be charged from the due date at Bank of England base rate plus 2.5% and will continue to accrue even when a time to pay arrangement has been agreed.
Secondly what happens if the VAT return is submitted late
- For each return you don’t submit you will get a penalty point, once you receive a penalty point threshold, you will receive a £200 penalty and a further £200 penalty for each subsequent late submission while you are at the threshold.
Accounting Period | Penalty points Threshold | Period of compliance | ||||
Annually | 2 | 24 months | ||||
Quarterly | 4 | 12 months | ||||
Monthly | 5 | 6 months |
So if you have any queries with the new VAT penalties from 1 January 2023 or you need assistance with your accounting please get in touch with Cloud accounts Services Limited, we will be happy to help.