HMRC’s New Penalty Regime for VAT

Posted 29th May 2023

In VAT

On 1 January 2023, HMRC introduced a new penalty regime for VAT. The new regime aims to simplify and strengthen the penalties for late submission and payment of VAT returns, as well as late payment of VAT.

Under the new regime, there are two types of penalties:

Late submission penalties: These penalties are charged if a VAT return is submitted late. The amount of the penalty depends on how late the return is submitted.
Late payment penalties: These penalties are charged if VAT is paid late. The amount of the penalty depends on how late the payment is made.

There are also a number of exemptions from the penalties, such as:

Penalties for late submission of nil returns: There is no penalty for submitting a nil VAT return late.
Penalties for late payment of VAT due to a Time To Pay arrangement: If you have a Time To Pay arrangement with HMRC, you will not be charged a late payment penalty.
The new penalty regime is designed to be more effective at deterring late submission and payment of VAT. If you are a VAT-registered business, it is important to be aware of the new penalties and to take steps to avoid them.

Here are some tips for avoiding VAT penalties:

Submit your VAT returns on time. The deadline for submitting your VAT return is usually 1 month after the end of your accounting period.

Pay your VAT on time. The deadline for paying your VAT is usually 30 days after the end of your accounting period.

Set up a Time To Pay arrangement if you need more time to pay your VAT. A Time To Pay arrangement is a formal agreement with HMRC that allows you to pay your VAT in instalments.

Get help from us if you need assistance with VAT compliance. An accountant or tax adviser can help you to understand your VAT obligations and to stay on top of your VAT returns and payments.

By following these tips, you can help avoid the new VAT penalties and stay in compliance with HMRC’s VAT rules.

Confused about the new VAT penalty regime? Don’t risk costly mistakes. Reach out to MNE Accounting for expert guidance and peace of mind.