There have been updates to VAT penalties for delayed submissions, so stay informed to avoid any surprises.

From 1^st January 2023, HMRC revised penalties for late VAT Returns and late payment of VAT for accounting periods. Additionally, there have been changes in how interest is levied. The aim of these changes is to streamline and differentiate penalties and interest. Your accounting period refers to the timeframe for which you must submit a return to HMRC, such as quarterly.

Late submission penalties operate on a points system.

For each late submission, you’ll accumulate penalty points until you reach a certain threshold.

Once the threshold is reached, you’ll incur a £200 penalty. Furthermore, for each subsequent late submission while at the threshold, an additional £200 penalty will be applied.

Penalty Point Threshold

5 Penalty Points if your accounting period is Monthly

4 Penalty Points if your accounting period is Quarterly

2 Penalty Points if your accounting period is Annually

See Below Example

Your company submits VAT Returns quarterly therefore your threshold is 4 penalty points.

You have submitted your last 3 returns late and have already incurred 3 points.

Your next return is also late so you receive your fourth penalty point, which means you have now reached the threshold so unfortunately will receive a £200 penalty.

Things To Remember

The rules do not apply if…

1. It’s your first VAT Return
2. It’s your final Vat Return (you have cancelled your VAT registration)
3. If it is a one-off return (covering a period that is not your usual – for example you have changed your accounting period).