Are you ready for upcoming changes to VAT penalties and VAT interest charges?
For VAT periods starting on or after 1 January 2023, the default surcharge will be replaced by new penalties if you submit VAT returns late or pay VAT late.
There will also be changes to how VAT Interest is calculated.
Late submission penalties will work on a points-based system.
For each VAT Return you submit late you will receive one late submission penalty point.
Once a penalty threshold is reached, you will receive a £200 penalty and a further £200 penalty for each subsequent late submission.
The late submission penalty points threshold will vary according to your submission frequency.
You will be able to reset your points back to zero if you:
- submit your returns on or before the due date for your period of compliance — this will be based on your submission frequency
- make sure all outstanding returns due for the previous 24 months have been received by HMRC
From 1 January 2023, HMRC will charge late payment interest from the day your payment is overdue to the day your payment is made in full.
Late payment interest is calculated as the Bank of England base rate plus 2.5%.
If you put money aside for your VAT and have processes in place you won’t have to worry about any deadlines, and money. You can peacefully sleep at night as everything has been taken care of.
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