HMRC sounds warning on new VAT penalties

HMRC is reminding VAT-registered businesses to file their VAT returns and pay on time ahead of new penalties being applied.

The tax authority says that the new penalties will be 'fairer and more proportionate' for businesses who submit their VAT returns or pay their VAT late.

The first monthly returns and payments affected by the penalties are due by 7 March 2023.

The late payment penalties and points-based late submission penalties were introduced from 1 January 2023, replacing the VAT default surcharge, and apply to accounting periods which start after that date.

The penalties for late VAT returns also apply to businesses that submit nil returns and repayment returns. Additionally, changes have been made to how interest is calculated.

Paul Riley, Director of Tax Administration at HMRC, said:

'Our aim is to help customers get things right before monetary penalties are applied; a points-based system for late VAT returns will not punish the occasional error.

'We are contacting 2.5 million VAT-registered businesses about the changes and will continue to support customers to help them manage their tax affairs and payments.'

Internet link: GOV.UK