{"id":21385,"date":"2021-09-09T11:55:05","date_gmt":"2021-09-09T11:55:05","guid":{"rendered":"https:\/\/smh.group\/?p=21385"},"modified":"2023-02-15T13:47:14","modified_gmt":"2023-02-15T13:47:14","slug":"new-vat-penalties-regime-on-the-horizon","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/new-vat-penalties-regime-on-the-horizon\/","title":{"rendered":"New VAT penalties regime on the horizon"},"content":{"rendered":"

The existing penalty regime for VAT returns has the advantage of simplicity, but it\u2019s something of a blunt instrument. The new system coming in for return periods beginning on or after 1 April 2022 will be fairer, but some businesses will find themselves caught up in a complex web of escalating penalties.<\/strong><\/p>\n

The penalty scheme will be clearly divided, with one regime for late payments and another for late VAT return submissions.<\/p>\n

Late payments <\/strong><\/h2>\n

Unlike the current system of default surcharges, each late payment will be considered separately, with the following penalties charged unless there is reasonable excuse:<\/p>\n\n\n\n\n\n\n
Days late<\/strong><\/td>\nPenalty<\/strong><\/td>\n<\/tr>\n
Up to 15 <\/strong><\/td>\nNone<\/td>\n<\/tr>\n
16 <\/strong>to 30 <\/strong><\/td>\n2% of outstanding VAT<\/td>\n<\/tr>\n
More than 30 <\/strong><\/td>\nA further 2% penalty plus a daily penalty at a rate of 4% p.a. on the outstanding VAT<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

A business can avoid any further penalties accruing by entering into a time to pay arrangement with HMRC. For example, penalties are avoided if a business approaches HMRC when payments are already 12 days late.<\/p>\n

For the first year, HMRC will take a light-touch approach to the initial 2% late payment penalty.<\/p>\n

Regardless of whether any late payment penalties are charged, interest will be incurred from the due date until payment is made. A time to pay arrangement will not stop interest accruing.<\/p>\n

Late submissions<\/strong><\/h2>\n

Under a points-based system, a business will incur a penalty point for each late VAT return Businesses that file quarterly will be charged a \u00a3200 penalty when they reach a penalty threshold of four points.<\/p>\n