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HMRC reminds companies about new VAT penalties and curiosity forward of submitting deadline

HM Income and Customs (HMRC) is reminding VAT registered companies to file their VAT returns and pay on time, forward of recent penalties being utilized.

The brand new penalties might be fairer and extra proportionate for companies who submit their VAT returns or pay their VAT late. The primary month-to-month returns and funds affected by the penalties are due by 7 March 2023.

The late cost penalties and points-based late submission penalties had been launched from 1 January 2023, changing the VAT default surcharge, and apply to accounting durations which begin after that date.

The penalties for late VAT returns additionally apply to companies that submit nil returns and reimbursement returns. Adjustments have additionally been made to how curiosity is calculated.

Paul Riley, director of Tax Administration, HMRC, mentioned: “Our goal is to assist prospects get issues proper earlier than financial penalties are utilized; a points-based system for late VAT returns is not going to punish the occasional error.

“We’re contacting 2.5 million VAT registered companies concerning the adjustments and can proceed to assist prospects to assist them handle their tax affairs and funds.”

The adjustments to VAT penalties and curiosity funds are:

Late submission penalties – These work on a points-based system. For every VAT return submitted late, prospects will obtain a penalty level till they attain the penalty level threshold – at which stage they may obtain a £200 penalty. An extra £200 penalty may also apply for every subsequent late submission whereas on the threshold, which varies to take account of month-to-month, quarterly and annual accounting durations.

Late cost penalties – If a VAT cost is greater than 15 days overdue, companies pays a primary late cost penalty. If the VAT cost is greater than 30 days overdue, the primary late cost penalty will increase and a second late cost penalty may also apply. To assist prospects get used to the adjustments HMRC is not going to cost a primary late cost penalty on VAT funds due on or earlier than 31 December 2023, if companies both pay in full or a cost plan is agreed inside 30 days of the cost due date.

Cost plans – HMRC will assist companies that can’t pay their VAT invoice in full. Clients could possibly arrange a cost plan to pay their invoice in instalments. After 31 December 2023, if a buyer proposes a cost plan inside 15 days of cost being due and HMRC agrees it, they’d not be charged a late cost penalty, supplied that they maintain to the situations of the cost plan. Late cost penalties can apply the place proposals are made after the primary 15 days, however the settlement of the cost plan can forestall them rising.

Curiosity calculations – HMRC has launched each late cost and reimbursement curiosity, which can change earlier VAT curiosity guidelines. This brings the brand new regime in step with different taxes.

Additional particulars on the adjustments could be discovered on GOV.UK.

HMRC can also be reminding companies to be conscious of scams as they regulate to the adjustments. By no means share your HMRC login particulars. Somebody utilizing them may steal from you or make a fraudulent declare in your identify. By no means give out private info in case you are uncertain of who’s contacting you. For extra info, go to GOV.UK and seek for ‘phishing and scams’.