It’s important to stay up to date with the latest regulations and requirements related to taxes, including Value Added Tax (VAT) to avoid penalties.
HM Revenue & Customs (HMRC) recently reminded businesses about new VAT penalties and interest payments ahead of the filing deadline.
Here's what you need to know:
What are the new penalties and interest payments?
From 7 March 2023, the first late monthly returns and payments will be affected by the new penalty system.
This will consist of two separate penalty charges: one for late submission, and one for late payment.
The penalty for late submission works on a points-based system. For each late return, customers will receive a penalty point until you reach the threshold, and you will then receive a £200 fine. Another penalty will apply for each following late submission, this will apply to monthly, quarterly and annual accounting periods.
For a late payment which is more than 15 days overdue, you will pay a late payment penalty. This increases if the payment becomes more than 30 days overdue. A second late payment will also apply.
HMRC will not charge a first late payment penalty on VAT payments due or on or before 31 December 2023. This will be applicable if businesses pay in full or a payment plan is agreed within 30 days of the payment due date.
Why does this matter for business owners?
These penalties and charges can quickly add up and have a significant impact on your business's finances.
To avoid these penalties and charges, it's important to make sure that you submit your VAT returns on time and pay any VAT owed by the due date.
By being aware of the changes and taking steps to ensure that you comply with the regulations, you can avoid costly penalties and interest charges and keep your business's finances in good shape.
For more advice on VAT penalties, interest payments and your obligations, contact us today.