The new VAT penalty regime

Vat

With the second part of the government’s plan to digitalise tax administration around the corner, a new points-based penalty regime is to commence on 1 January 2023.

The penalty regime applies to all who are required to submit a VAT return, this is inclusive of VAT-registered businesses, and all affected by the upcoming Making Tax Digital for Income Tax Self-Assessment.

Structured around a points system with one point issued for each deadline missed, the regime has a points threshold determined by the frequency of your VAT returns.

Submission FrequencyThresholdPeriod of Compliance
Annually224 months
Quarterly412 months
Monthly56 months

Note that any nil or repayment VAT returns submitted late are still subject to penalty points and fines.

Once a points threshold has been reached a financial penalty of £200 will be issued and a further £200 fine will apply for every late submission thereafter.

In order to reset your points to zero you must submit all returns and payments on time for the course of the relevant period of compliance stipulated in the table above.

LATE PAYMENT PENALTY

In addition to the late penalty points regime for late return submissions, HMRC has introduced a late payment penalty scheme that is a percentage based on the length of time the debt is outstanding.

 

Period Debt Is OutstandingPenalty Percentage
Up to 15 days outstandingNo penalty if the VAT is paid in full or a payment plan is agreed upon between 1 and 15 days
Between 16 and 30 days outstanding  A first penalty will be issued calculated at 2% on the VAT you owe on day 15 plus 2% on the VAT you owe on day 30
31 days or more outstandingA first penalty is calculated at 2% of the VAT owed on day 15 plus 2% on the VAT you owe on day 30.

HMRC is providing a period of grace to allow you time to become familiar with the changes implemented therefore will not charge a first late payment penalty for year one between 1 January 2023 and 31 December 2023 providing you pay in full within 30 days of the payment due date.

At Pierce, we have a dedicated and experienced Cloud Accounting team that can assist if you have any questions in relation to the new penalty regime or if you are unsure how Making Tax Digital for Income Tax Self-Assessment will affect you. Please contact on 01254 688130.

Enjoyed this? Read more from Pierce CA Ltd

Latest news

1

Financial Affairs support the Red Rose Award winners' reception Networking photograph

Financial Affairs support the Red Rose Award winners' reception

24 Apr 2025

2

Lancaster University unveils cutting-edge computing and cyber security facilities Head of Lancaster University's School of Computing and Communications Professor Nigel Davies, Chris Ensor, Vice-Chancellor Professor Andy Schofield and Pro-Vice-Chancellor (Engagement) Professor Sarah Kemp

Lancaster University unveils cutting-edge computing and cyber security facilities

24 Apr 2025

3

Northcote announces new owners Alf and Clare Ellis as Lisa Goodwin-Allen returns as chef patron-director Craig Bancroft and Lisa Goodwin-Allen

Northcote announces new owners Alf and Clare Ellis as Lisa Goodwin-Allen returns as chef patron-director

24 Apr 2025

4

Major shareholder makes Inspired takeover bid inspired-500x500.png

Major shareholder makes Inspired takeover bid

23 Apr 2025

5

Nominate your favourite family-run business in Lancashire. Thompsons meeting (1).png.png

Nominate your favourite family-run business in Lancashire.

22 Apr 2025

Pc Prestonmacan Gif980x120 March
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200px 2
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

People Power: Exclusive Event Series
Stay ahead in 2025.jpg.jpg
LBV Hub Seminars
29 Apr 2025 - 29 Apr 2025

People Power: Exclusive Event Series

People's History Museum, Manchester, M3 3ER

17:00 - 21:00

Planning for the future + navigating Inheritance Tax changes
Planning for the future + navigating Inheritance Tax changes for website.png.png
LBV Hub Seminars
01 May 2025 - 01 May 2025

Planning for the future + navigating Inheritance Tax changes

Stanley House Hotel, Mellor, Blackburn, BB2 7NP, Blackburn, BB2 7NP

08:00 - 10:30

Advantage: AI – A Workshop for Business Leaders – May 2
EV-land-2025-05B.png.png
LBV Hub Seminars
02 May 2025 - 02 May 2025

Advantage: AI – A Workshop for Business Leaders – May 2

Door4 Office, Burnley Wharf, Manchester Road, Burnley, BB11 1JG

09:00 - 11:00

A night at the races
1.png.png
LBV Hub Dinners / Balls
02 May 2025 - 02 May 2025

A night at the races

Morecambe FC, Morecambe, LA4 4TB

19:00 - 23:59

Research and Knowledge Exchange Showcase
13421_research_knowledge_exchange_2025_600x300.jpg.jpg
LBV Hub Awards
07 May 2025 - 08 May 2025

Research and Knowledge Exchange Showcase

University of Central Lancashire , Preston, PR1 2HE

09:00 - 17:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more Lbv121 Online Graphic
Subscribe now

Weekly news bulletin