New penalties have been introduced for submitted VAT returns and paying VAT late from 1st of January 2023. The new system replaced the default surcharge, The new system will now apply for nil and repayment returns.
To avoid penalties you need to:
- Submit your VAT returns on time
- Pay your VAT on time
What will happen if you submit the VAT return late
If you submit your VAT return late on or after 1st of January, 2023, penalties for late submissions will be calculated on a points-based system. Penalty points will be given for each VAT return which was submitted late.
If you reach the points threshold, you will have to pay a fixed penalty of £200. You will also pay another £200, each time you submit a VAT return late while you are at a threshold. The point threshold will depend how often you submit your VAT returns. Go to gov.uk to find out more about late submission points and penalties.
To find out how to remove the penalty points.
What will happen if you do not pay the VAT on time
If the payment of your VAT obligation is more than 15 days overdue, you will have to pay the first late payment penalty. If your payment is over 30 days overdue, you will have to pay the second late payment penalty.
You will be able find out more how the late payment penalties work and what to do to avoid them, go to gov.uk.
You will also have to pay interest from the day the payment is due to the day the payment is made in full. Interest will be calculated at the Bank England interest rate plus 2.5%.
How HMRC will support you to get used to the new penalty system
You will not be charged a first late payment penalty on VAT payments due on or before 31st of December 2023, if you either
- Pay in full within 30 days of your fist payment due date
- Ask for a payment plan within 30days of your payment due date and they agree to it.
If your payment is over 30 days overdue, you will have to pay a first and second late payment penalties.
If you have paid too much VAT
If you are owed VAT and HMRC overdue is repaying you, HMRC will pay you repayment interest. This will also be calculated at the Bank of England base rate minus 1% with a minimum rate of 0.5%.
You can also watch a webinar on gov.uk for an overview of new penalty system for late VAT submissions and repayments.
UK-Accountant will work as your VAT agent if you need to dispute any penalties. Contact us for more help.
How to protect your information
You may be contacted by someone saying they are from HMRC and wanting you to transfer money urgently or give personal information, never rush to take action. Take time to check HMRC’s advice how to deal with scams before you do anything. you can also phone HMRC directly or write to us to make sure you use the contact details from HMRC website.
you should not share any personal details or login details. For more information check the information for Phishing and scams advice.