New penalty points for late submission of VAT returns

HMRC has announced a new ‘penalty point’ regime for the late submission of VAT returns and the late payment of VAT. It will apply for VAT accounting periods starting on or after 1 January 2023 and also applies to a nil or repayment return. The way interest is charged is also changing.

You must send a VAT return by the deadline for your accounting period; typically, this is quarterly. Late submission penalties work on a points-based system. For each return you submit late you will receive a penalty point. Once you’ve reached a penalty point threshold, you’ll receive a £200 penalty and a further £200 penalty for each subsequent late submission, while you’re at the threshold.

The penalty point threshold is set by your accounting period: Annually (2 penalty points threshold); Quarterly (4 penalty points threshold); Monthly (5 penalty points threshold).

If you have agreement from HMRC to use non-standard accounting periods, different rules apply. Also, if you’ve agreed with HMRC to change how often you submit returns, HMRC will adjust your threshold and penalty points.

The late submission penalty rules do 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

You can check details of penalties in your VAT online account.

This new regime replaces the current default surcharges imposed by HMRC on VAT and are, broadly speaking, less punitive than the current regime. If you’ve got any questions at all, then give us a call on tel: 01892 513515.