The new VAT penalty regime

Vat

With the second part of the government’s plan to digitalise tax administration around the corner, a new points-based penalty regime is to commence on 1 January 2023.

The penalty regime applies to all who are required to submit a VAT return, this is inclusive of VAT-registered businesses, and all affected by the upcoming Making Tax Digital for Income Tax Self-Assessment.

Structured around a points system with one point issued for each deadline missed, the regime has a points threshold determined by the frequency of your VAT returns.

Submission FrequencyThresholdPeriod of Compliance
Annually224 months
Quarterly412 months
Monthly56 months

Note that any nil or repayment VAT returns submitted late are still subject to penalty points and fines.

Once a points threshold has been reached a financial penalty of £200 will be issued and a further £200 fine will apply for every late submission thereafter.

In order to reset your points to zero you must submit all returns and payments on time for the course of the relevant period of compliance stipulated in the table above.

LATE PAYMENT PENALTY

In addition to the late penalty points regime for late return submissions, HMRC has introduced a late payment penalty scheme that is a percentage based on the length of time the debt is outstanding.

 

Period Debt Is OutstandingPenalty Percentage
Up to 15 days outstandingNo penalty if the VAT is paid in full or a payment plan is agreed upon between 1 and 15 days
Between 16 and 30 days outstanding  A first penalty will be issued calculated at 2% on the VAT you owe on day 15 plus 2% on the VAT you owe on day 30
31 days or more outstandingA first penalty is calculated at 2% of the VAT owed on day 15 plus 2% on the VAT you owe on day 30.

HMRC is providing a period of grace to allow you time to become familiar with the changes implemented therefore will not charge a first late payment penalty for year one between 1 January 2023 and 31 December 2023 providing you pay in full within 30 days of the payment due date.

At Pierce, we have a dedicated and experienced Cloud Accounting team that can assist if you have any questions in relation to the new penalty regime or if you are unsure how Making Tax Digital for Income Tax Self-Assessment will affect you. Please contact on 01254 688130.

Enjoyed this? Read more from Pierce CA Ltd

Latest news

1

fulfilmentcrowd ships 200,000 items on Black Friday Fulfilmentcrowd Black Friday

fulfilmentcrowd ships 200,000 items on Black Friday

01 Dec 2023

2

Blackpool's civil service hub hits construction milestone Civil Service Hub Construction

Blackpool's civil service hub hits construction milestone

30 Nov 2023

3

Don't judge, not everybody's got a great brand, ok? Laura Weldon Studio LWD

Don't judge, not everybody's got a great brand, ok?

27 Nov 2023

4

Glitz, glamour and generosity see Rainbow Hub ball raise £70,000 Rainbow Hub Ball 2023.jpg.jpg

Glitz, glamour and generosity see Rainbow Hub ball raise £70,000

01 Dec 2023

5

Lancashire/Morecambe Hotspots: Give and tech Leighton Hall

Lancashire/Morecambe Hotspots: Give and tech

01 Dec 2023

2664LBD980x120gif
Background image for hub sign up block

LBV Hub

Reach 50,000 members of the Lancashire business community

Post your news
Post your events
Post your offers
Company profile
Social reach
Magazine coverage
Sign-up
Events
Help to Grow Management Course
Collaboration v3.png.png
LBV Hub Seminars
31 Oct 2023 - 14 Feb 2024

Help to Grow Management Course

University of Central Lancashire, School, Online and face-to-face , UCLan, PR1 2HE

09:30 - 11:30

Business Networking in Preston - BNI Brunch
EVENT LISTING SIZING Brunch .png.png
LBV Hub Networking
01 Dec 2023

Business Networking in Preston - BNI Brunch

Samlesbury Hotel, Preston, PR5 0UL

09:30 - 11:00

Business Networking in Blackburn - BNI Vista
EVENT LISTING Networking In Halifax (1).png.png
LBV Hub Networking
05 Dec 2023

Business Networking in Blackburn - BNI Vista

Hampton by Hilton, Blackburn, BB1 3AL

06:45 - 08:30

Using your existing Pension to invest in Commercial property
Chris Montgomery SmgTvepind4 Unsplash
LBV Hub Webinar
05 Dec 2023

Using your existing Pension to invest in Commercial property

Zoom, Burnley, BB11 1JG

09:00 - 09:45

Business Networking in Lancaster - Eden Business Network
Eden Business Network.png.png
LBV Hub Networking
06 Dec 2023

Business Networking in Lancaster - Eden Business Network

The Borough, 3 Dalton Square, Lancaster, LA1 1PP

18:30 - 20:30

Twas the night before ransomware
Event Graphic 3.jpg.jpg
LBV Hub Seminars
07 Dec 2023 - 07 Dec 2023

Twas the night before ransomware

The Lowry Theatre, Salford Quays, M50 3AZ

14:00 - 17:00

Discover the power of BNI - Business Networking in Preston
Preston.png.png
LBV Hub Networking
07 Dec 2023

Discover the power of BNI - Business Networking in Preston

Samlesbury Preston Hotel, Preston New Road, Samlesbury, PR5 0UL

09:30 - 11:00

The Business Network Central & East Lancashire
LBV Hub Networking
07 Dec 2023

The Business Network Central & East Lancashire

Stanley House, Blackburn, BB2 7NP

11:30 - 14:30

Business Networking in Preston - BNI Brunch
EVENT LISTING SIZING Brunch .png.png
LBV Hub Networking
08 Dec 2023

Business Networking in Preston - BNI Brunch

Samlesbury Hotel, Preston, PR5 0UL

09:30 - 11:00

Business Networking in Lancaster - Eden Business Network
Eden Business Network.png.png
LBV Hub Networking
13 Dec 2023

Business Networking in Lancaster - Eden Business Network

The Borough, 3 Dalton Square, Lancaster, LA1 1PP

18:30 - 20:30

Discover the power of BNI ONLINE - Business Networking in Lancashire
Preston.png.png
LBV Hub Networking
14 Dec 2023

Discover the power of BNI ONLINE - Business Networking in Lancashire

Online Meeting, -, -

09:30 - 11:00

Business Networking in Preston - BNI Brunch
EVENT LISTING SIZING Brunch .png.png
LBV Hub Networking
15 Dec 2023

Business Networking in Preston - BNI Brunch

Samlesbury Hotel, Preston, PR5 0UL

09:30 - 11:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV Advertising Visual NovDec
Subscribe now

Weekly news bulletin