(1) |
Point-based system Late submission penalties work on a points-based system under the New VAT penalties regime effective from 1 January 2023. For each VAT Return submitted late, a point is incurred for each late filing up to a maximum number of points that depends on the frequency of returns that are due. There are different thresholds for monthly, quarterly and annual filing. Once a penalty threshold is reached, a fixed penalty of £200 is levied. Each subsequent late submission of VAT return will trigger another £200 penalty. A penalty will be charged when the below maximum penalty points threshold reached:
The points will stay at the threshold until a consecutive number of returns have been submitted on time. However, if the number of late submissions has not reached the maximum points of penalty threshold, less than 4 points for Quarterly for example, and the subsequent submissions are submitted on time, the points will be cancelled after a period of two years. |
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(2) |
Remove Penalty Points Any points total can be reset to zero at any time once a business has met the following two conditions: (a) Complete a period of compliance, submitting all returns by the deadline. The length for Period of compliance varies based on accounting period, below table shows the number of Returns need to file on time to remove points:- (b) All returns that were due within the preceding 24 months have been submitted. Example: Company A whose VAT Accounting Period is on a quarterly Basis; The company filed late for the first four quarters starting on 1 January 2023; The company filed on time for the next four quarters.
|
Days Overdue for Payment |
First Late Penalty |
Second Late Penalty |
0 to 15 |
No penalty for paying in full or agreed a time to pay |
N/A |
between 16 and 30 |
Calculated at 2% on the VAT owed at day 15 if paying in full or agreed a time to pay |
N/A |
Day 31plus |
Calculated at: - 2% of VAT owed at day 15. - plus 2% of VAT owed at day 30 |
A daily rate of 4% per year from day 31 until the outstanding is paid in full |
Days Qverdue for Payment |
Overdue Period |
Calculated at |
First Late Penalties |
Second Late Penalties |
Accumulated Total |
0 to 15
|
7 Aug-22 Aug |
£20,000 x 0% |
£0.00 |
N/A |
£0.00 |
between 16 and 30 |
23 Aug-6 Sep |
£20,000 x 2% |
£400.00 |
N/A |
£400.00 |
Day 31 plus |
7 Sep-27 Sep |
£20,000 x 2% +(£20,000x4%)/365 x 20 days |
£400.00 |
£43.84
|
£843.84.00 |
Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage. |