Hey there!
If you were worried or wondering about how the new VAT penalties work, then we've put something together to help you understand them a bit more.
To steer clear of penalties, here's what you need to do:
Make sure you submit your VAT returns on time, using software that's compatible with Making Tax Digital (unless you're exempt from that, of course).
Keep up with your VAT payments, making sure they're paid on time.
Oh, and there's one more thing to keep in mind. The way interest calculations on late VAT payments and VAT repayments has also had a little facelift for VAT periods starting from January 1st 2023.
Here's what happens if you're a bit behind on submitting your VAT return or paying your VAT. No need to stress, though. We've got the inside scoop on how it all works.
Starting from January 1st 2023, a points-based system has been introduced for late VAT return submissions. Here's the deal; every time you submit a VAT return late, you'll rack up one penalty point. Once you hit your points threshold, a fixed £200 penalty will be added. And if you keep submitting late while at the threshold, another £200 penalty will come your way each time. The points threshold depends on how often you have to submit a VAT return.
For an in-depth breakdown on how these late submission penalties work, the points threshold and how to avoid them, details can be found on GOV.UK You'll even find info on how to clear those penalty points you've accumulated for submitting your VAT return late.
Now, lets talk about late payments. If your payment is 15 days or more overdue, you'll be looking at a first late payment penalty. And if it goes past the 30-day mark, a second late payment penalty will join the party.
To help you get used to the new system, HMRC won't charge a first late payment penalty on VAT payments which are due on or before December 31st 2023 so long as you:
Pay in full within 30 days of the payment due date.
You are approved for a payment plan within the 30 days of your payment due date.
If your payment is over 30 days late, you will have to pay a first and second late payment penalty.
If you need any more information about how these HMRC changes might affect you, drop us a message and we'll talk you through it.
Alternatively you can check out the full details here : How late payment penalties work if you pay VAT late - GOV.UK (www.gov.uk)
Comments