VAT registered businesses are being reminded to ensure that they file and pay their VAT returns on time or risk facing penalties.
The first monthly returns and payments affected by the penalties are due by the 7th of March 2023 – however, new penalties have recently been applied, making them fairer and more proportionate for firms who submit late returns or pay late.
Some of the changes include:
Late submission penalties – for each VAT return submitted after the due date, a penalty point will be received until they reach the penalty point threshold, which will result in a £200 penalty.
Another £200 penalty will also apply for each subsequent late submission while at the threshold, which varies to take account of monthly, quarterly and annual accounting periods.
Late payment penalties – businesses will need to pay a first late payment penalty if the VAT payment is more than 15 days overdue. If this reaches 30 days then the first late payment increases and a second late payment penalty will apply on top of that.
HMRC says that to help with these changes, it will not charge a first late payment penalty on VAT payments due on or before the 31st of December 2023, if businesses either pay in full or a payment plan is agreed within 30 days of the payment due date.
Paul Riley, director of Tax Administration, HMRC, said, “Our aim is to help customers get things right before monetary penalties are applied; a points-based system for late VAT returns will not punish the occasional error.
“We are contacting 2.5 million VAT registered businesses about the changes and will continue to support customers to help them manage their tax affairs and payments.”
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