{"id":18944,"date":"2023-10-19T11:33:48","date_gmt":"2023-10-19T10:33:48","guid":{"rendered":"https:\/\/www.langricks.com\/?page_id=18944"},"modified":"2023-11-13T17:05:23","modified_gmt":"2023-11-13T17:05:23","slug":"understanding-hmrcs-new-vat-penalties","status":"publish","type":"page","link":"https:\/\/dev.withcreative.co.uk\/langricks\/understanding-hmrcs-new-vat-penalties\/","title":{"rendered":"Understanding HMRC’s New VAT Penalties: What You Need to Know\u00a0"},"content":{"rendered":"

In 2022, the HMRC announced changes to the penalties for the late filing and payment of VAT. These changes took place for VAT periods starting on or after 1 January 2023.<\/span>\u00a0<\/span><\/h4>\n

Due to these changes, a period of familiarisation was introduced to ease businesses and individuals into the new format of penalties where HMRC<\/a> were not charging a first late payment penalty.<\/span>\u00a0<\/span><\/p>\n

However, this period of familiarisation is coming to an end on 31 December 2023.\u00a0\u00a0Here\u2019s everything businesses and individuals need to know:<\/p>\n

Late submission (filing) of your VAT return<\/span><\/b>\u00a0<\/span><\/h5>\n

Firstly, there are penalties for submitting\/filing your VAT return late. The new penalty system introduces a \u201cPenalty Points Threshold\u201d, if you were to reach the threshold then a penalty of \u00a3200 will be applied. Then, each subsequent late filing of a return will incur an additional \u00a3200.<\/span>\u00a0<\/span><\/p>\n

Threshold<\/span><\/b>\u00a0<\/span><\/h5>\n

The threshold varies depending on your VAT submission frequency. One penalty point is awarded for each late submission and once you reach the threshold the \u00a3200 penalty will be applied.<\/span>\u00a0<\/span><\/p>\n\n\n\n\n\n\n
Submission Frequency<\/span><\/b>\u00a0<\/span><\/td>\nPenalty Points Threshold<\/span><\/b>\u00a0<\/span><\/td>\n<\/tr>\n
Annually<\/span>\u00a0<\/span><\/td>\n2<\/span>\u00a0<\/span><\/td>\n<\/tr>\n
Quarterly<\/span>\u00a0<\/span><\/td>\n4<\/span>\u00a0<\/span><\/td>\n<\/tr>\n
Monthly<\/span>\u00a0<\/span><\/td>\n5<\/span>\u00a0<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Late payment of the VAT\u00a0<\/span><\/b>\u00a0<\/span><\/h5>\n

Next up is a penalty for not paying your VAT on time. The late payment penalty system depends on how late the payment is received by the HMRC. Please see below how the system works:<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n\n\n\n\n\n\n
Payment overdue by<\/span><\/b>\u00a0<\/span><\/td>\nPenalty charge<\/span><\/b>\u00a0<\/span><\/td>\n<\/tr>\n
Up to 15 days overdue<\/span>\u00a0<\/span><\/td>\nNo penalty<\/span>\u00a0<\/span><\/td>\n<\/tr>\n
Between 16 and 30 days overdue<\/span>\u00a0<\/span><\/td>\n2% on the VAT owed at day 15<\/span>\u00a0<\/span><\/td>\n<\/tr>\n
31 days overdue<\/span>\u00a0<\/span><\/td>\n\n