Prepare for upcoming HMRC changes to VAT penalties and VAT interest charges
From 1st of January 2023 there will be new points based penalty system implemented for the late filing of VAT returns, and new penalties for the late payment of VAT bills.
For late submission of VAT return:
- If your VAT return is submitted late you will receive one late submission penalty point.
- This is also relevant to any nil or repayment VAT returns received late.
Once a penalty threshold is reached, you will receive a £200 penalty and a further £200 penalty for each subsequent late submission.
The late submission penalty points threshold will vary according to your submission frequency.
- You will be able to reset your points back to zero if you:
– submit your returns on or before the due date for your period of compliance — this will be based on your submission frequency
– make sure all outstanding returns due for the previous 24 months have been received by HMRC
For late payment of VAT bill
There will also be penalty If you do not pay your VAT liability on time.
- Up to 15 days overdue
You will not be charged a penalty if you pay the VAT you owe in full or agree a payment plan on or between days 1 and 15 from the day your payment is overdue.
- Between 16 and 30 days overdue
You will receive a first penalty calculated at 2% on the VAT you owe at day 15 if you pay in full or agree a payment plan on or between days 16 and 30.
31 days or more overdue
You will receive a first penalty calculated at 2% on the VAT you owe at day 15 plus 2% on the VAT you owe at day 30.
You will receive a second penalty calculated at a daily rate of 4% per year for the duration of the outstanding balance.
The above penalties are calculated when the outstanding balance is paid in full or a payment plan is agreed.
HMRC has provided with Period of familiarisation
To give time to taxpayers to get used to the changes, HMRC will not be charging a first late payment penalty for the first year from 1 January 2023 until 31 December 2023, if you pay in full within 30 days of your payment due date.
How late payment interest will be charged
From 1 January 2023, HMRC will charge late payment interest from the day your payment is overdue to the day your payment is made in full.
Late payment interest is calculated as the Bank of England base rate plus 2.5%.
If you have any questions, please do not hesitate to contact us on:
Email : info@taks.org.uk
Telephone 01172565052
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