The government has announced that the new penalty regime for VAT, which was due to be introduced from 1 April 2022, will now be delayed until January 2023. The delay is to provide HMRC with extra time to ensure their IT systems are ready and well tested. The new...
Changes to VAT penalty regime delayed until 2023
The government has announced that the new penalty regime for VAT, which was due to be introduced from 1 April 2022, will now be delayed until January 2023.
The delay is to provide HMRC with extra time to ensure their IT systems are ready and well tested. The new scheme will reform the penalty regime for late submission of VAT returns and late payment of VAT.
Under the new regime, HMRC will issue a single penalty point for each late submission of a VAT return and once a business has exceeded a points threshold for multiple missed returns, a flat penalty of £200 will be charged.
There will also be penalties for late payments. The first charge will be imposed at 2% of the outstanding tax if the tax due on a return remains unpaid 15 days after its due date. After 30 days the penalty increases to 4%. The second late payment penalty is a daily penalty (set at 4% per year of the tax still outstanding at that point), starting from 31 days after the due date until the business pays the tax that is due. Late payment interest will be calculated at 2.5% above the Bank of England rate and will be payable on tax outstanding after the due date.
How can we help?
At Hawsons we provide a range of VAT services. Over the past 12 months, we have registered companies, sole proprietors, and partnerships for VAT with HMRC. Using our expertise, we have advised clients whether to register for VAT voluntarily or if they are required to register due to their turnover.
VAT on services is a complicated area. VAT rates may or may not apply depending on who is providing or buying them, where they are provided and the precise nature of the services provided.
More from our tax experts
You can find all of our latest tax articles and tax resources here.
If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.
Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.
Free initial meeting
Related content
Changes to VAT penalty regime delayed until 2023
HMRC give self-assessment taxpayers one month waiver
HMRC have announced that they will be waiving late filing and late payment penalties by one month for Self-Assessment taxpayers. This is to give them additional time to complete their 2020/21 tax return and pay any due tax if needed. However, HMRC are still...
Stamp Duty Land Tax: Consultation launched to reduce perceived abuse of the rules
HMRC has launched a consultation into the methods used to calculate Stamp Duty Land Tax (“SDLT”) on purchases of mixed-use property. A mixed-use property is where a property is considered as both residential and non-residential. In addition, there may also be a reform...
