The Government has made an update regarding new VAT late submissions, late payment penalties and interest changes. This article highlights some of these changes and is a great way of keeping you up to date with the latest VAT news.

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Overview

For VAT accounting periods starting on or after 1 January 2023, late submission penalties apply if you submit your VAT Return late. This includes nil or repayment returns. In addition to this the VAT default surcharge is being replaced by new penalties for returns that are submitted late.

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Late submission penalties

It is very crucial that you send a VAT Return by the deadline for your accounting period to avoid getting a penalty. Your accounting period is the period for which you need to send a return to HMRC, for example, quarterly.

Late submission penalties work on a points-based system. For each return you submit late, you’ll receive a penalty point until you reach the penalty point threshold.

When you reach the threshold, you’ll receive a £200 penalty. You’ll also receive a further £200 penalty for each subsequent late submission while you’re at the threshold. Find out how to remove penalty points.

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The penalty point threshold for accountancy period

The penalty point threshold is set by your accounting period.

Accounting period;     Penalty points threshold;

Annually                                   2

Quarterly                                  4

Monthly                                    5

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VAT Returns not affected

The late submission penalty rules will not apply to your:

• first VAT return if you’re newly VAT registered
• final VAT return after you cancel your VAT registration
• one-off returns that cover a period other than a month, quarter or year

For example, you might make a one-off return covering a four-month period because you changed from submitting quarterly to annually.

If you receive a late submission penalty point or a £200 penalty, HMRC will tell you in a penalty decision letter. The letter will offer you a review with HMRC.

Find out how and when you can appeal against a penalty.Your penalty may be cancelled or amended if you have a reasonable excuse. Therefore  it is important for you to ensure that you submit your VAT returns on time and pay any VAT due by the due date to avoid penalties and interest charges. If you are struggling to pay the VAT bill, you may be able to arrange a Time to Pay agreement with HMRC.

You can check details of penalties in your VAT online account and ask for a review through your online account. 

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