If your business is VAT registered, you need to be aware of the new penalties if you file your tax returns late.
HM Revenue and Customs (HMRC) introduced the new late payment penalties for businesses that do not submit their VAT returns and payments on time from 1 January 2023.
However, the first monthly returns that will be impacted by this change are due by 7 March 2023.
So, what do you need to know?
The VAT default surcharge has been replaced with late payment penalties and points-based late submission penalties.
Late submission penalties
Under the new penalty system, you will receive a penalty point for each VAT return you submit late.
Once the penalty point threshold has been hit, you will need to pay a £200 penalty. For any late submissions beyond this threshold, an additional £200 penalty will apply.
Late payment penalties
These penalties will apply to VAT payments that are 15 days overdue or more. If the payment is more than 15 days overdue, the first late payment penalty will apply.
But if your payment is more than 30 days overdue, the first penalty payment will increase and a second penalty will apply.
It should be noted that HMRC will not charge an initial late payment penalty for payments due on or before 31 December 2023 providing you pay in full or agree on a payment plan within 30 days of the due date. Find out more about the new penalties here.
How can you cope with this?
Filing your VAT returns on time and meeting the payment deadlines will avoid incurring these penalties, so make sure you know when the deadlines are.
But if you do miss the deadline, HMRC will allow businesses to pay their bill in instalments, using a payment plan.
If you are struggling to keep on top of your obligations, make sure you seek advice from an accountant.
Need advice on how you can fulfil your tax obligations and meet your deadlines? Get in touch.
