Changes to VAT Penalties and Interest for Late VAT Filing & Payments
09 November 2022
From 1st January 2023 HMRC is introducing a new penalty and interest regime for the late filing of VAT Returns and late VAT payments.
These penalties and interest charges will apply to everyone who submits a VAT Return from 1st January 2023.
Late VAT Filing Penalty
For each VAT Return submitted late, you will receive one late submission penalty point. If you submit VAT returns quarterly, once you reach 4 penalty points, you will receive a £200 penalty and a further £200 penalty for each subsequent late submission.
Note: Any nil or repayment VAT Returns received late will also be subject to late submission penalty points and ultimately financial penalties.
Late VAT Payment Penalty
- 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.
- 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. This is calculated when the outstanding balance is paid in full or a payment plan is agreed.
Note: In order to get used to these changes, HMRC will not charge a first late payment penalty for the first year (1st January – 31st December 2023) provided you pay in full within 30 days of the payment due date.
Late Payment Interest
Late payment interest will also apply and will be charged 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%.
For more detail please click on the link: Prepare for upcoming changes to VAT penalties and VAT interest charges - GOV.UK (www.gov.uk)