Late return
The current VAT default surcharge regime is based on a percentage of VAT due and/or owed ranging from 2% to 15% depending on how many late returns you have filed.
Under this new regime you will receive a late submission penalty point for each return you file late. Once the number of penalties you have reach the ‘penalty threshold’ you will receive a £200 penalty and a further £200 penalty for each subsequent late submission.
It is possible to reset your points back to zero by submitting future returns on time for a ‘period of compliance’.
Late submission penalty points threshold and period of compliance vary according to how often you normally file your VAT returns.
Submission frequency | Penalty points threshold | Period of compliance |
---|---|---|
Annually | 2 | 24 months |
Quarterly | 4 | 12 months |
Monthly | 5 | 6 months |
Late payment
The new penalties for late payment will increase according to how late you settle your VAT liability:
1-15 days late | no charge if paid in full or payment plan agreed with HMRC
16-30 days | first penalty charge of 2% of VAT owed
31+ days | further 2% of VAT owed plus an additional daily charge of 4% per annum calculated when the liability is settled, or a payment plan is agreed with HMRC
In addition to late payment penalties HMRC will charge late payment interest for the whole period a payment is overdue at a rate of 2.5% above the Bank of England base rate.
Repayment supplements
The current repayments supplements are 5% of the any VAT repayment not made within 30 calendar days of the VAT return being submitted, subject to a £50 cap.
HMRC will also replace this on 1 January 2023 with repayment interest.
The good news is the interest will run from the later of the due date or the date of submission of the return. However, the rate of interest is not so generous at a rate of 1% below the Bank of England base rate subject to a minimum rate of 0.5%
If you would benefit from professional help with your VAT and tax affairs, including support with self-assessment tax returns, corporation tax returns or tax planning, Hugh Davies & Co. are specialists offering a range of services to make your life easier. Get in touch with our expert team today to discuss your requirements.