To avoid penalties related to taxes, including Value Added Tax (VAT), it’s crucial to stay up-to-date with the latest regulations and requirements. HM Revenue & Customs (HMRC) has recently informed businesses about the new VAT penalties and interest payments before the filing deadline.
Starting from 7 March 2023, the new penalty system will apply to the first late monthly returns and payments. It includes two separate penalty charges for late submission and late payment. The late submission penalty works on a points-based system where each late return incurs a penalty point, leading to a £200 fine upon reaching the threshold. Another penalty will apply for each following late submission, covering monthly, quarterly, and annual accounting periods.
A late payment penalty will apply if the payment is more than 15 days overdue, which increases if it becomes more than 30 days overdue, and a second late payment will also apply. However, HMRC will not charge a first late payment penalty on VAT payments due on or before 31 December 2023, provided that businesses pay in full or agree to a payment plan within 30 days of the payment due date.
Business owners must take note of these changes as these penalties and charges can accumulate and affect their finances. It’s crucial to submit VAT returns on time and pay any VAT owed by the due date to avoid penalties and interest charges. By staying informed and compliant with regulations, businesses can prevent costly penalties and interest charges, maintaining their financial stability. For more advice on VAT penalties, interest payments, and obligations, businesses may contact HMRC or a tax professional.