Make Sure you are Ready for the Upcoming Changes to VAT Penalties and VAT Interest Charges


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From the 1st January 2023 there will be new VAT penalties and VAT interest charges. These will apply to everyone who submits a VAT Return. If your turnover is over £85,000 annually you must submit a VAT return. Any nil or repayment VAT returns which are received late will also be subject to late submission penalty points and financial penalties.


What are the penalties for submitting your VAT return late?


A points-based system will be introduced for late submission penalties. For every VAT Return that you submit late you will get one late submission point. When a penalty threshold is reached, you will get a £200 penalty and an additional £200 penalty for every other late submission.


Table of points-based system for late submission penalties for VAT returns

You can reset your points to 0 if:


  • You submit your VAT returns on or prior to the due date for your period of compliance

  • You ensure all outstanding VAT returns due for the previous year have been submitted to HMRC


What are the penalties for paying your VAT return late?


The earlier you pay your late payment penalties the less the penalty rate will be.


The table below details the penalties.


Table which shows the penalties for paying your VAT return late under the upcoming changes to VAT


Period for adjustment


To allow people the time to adjust to the new changes to VAT there will be no charge for a first late payment penalty for the first year (1st January 2023 – 31st December 2023) if you pay in full within 30 days of your payment due date.


How will late payment interest be charged?


You will be charged late payment interest from the day your payment is outstanding to the day your payment is paid in full.


Late payment interest is determined by the Bank of England base rate plus 2.5%.


Introduction of repayment interest


From 1st January 2023 the repayment supplement will be removed.


HMRC will pay repayment interest on any VAT that you are owed for the accounting period beginning on or after 1 January 2023.


Traynor Accounting Cumbernauld and Glasgow can help with the new changes to VAT

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VAT can be very confusing, even more so with the new changes being introduced, and it can be easy to make mistakes when completing a VAT return. Traynor Accounting Cumbernauld and Glasgow are VAT experts and have excellent knowledge in this complicated area of tax and can consequently advise you accordingly. Traynor Accounting provides a VAT return service for small and medium sized businesses throughout the UK.




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To find out more about our VAT return service give us a call today on 01236 222668 for your free accountant consultation (no obligation!).