VAT News

New Penalty Regime for Late VAT Returns


The 1st January 2023 sees the start of a new penalty regime for those who submit a late VAT return. The system uses a points based approach, as opposed to the previous Default Surcharge system, and you can catch up on the details here

These new rules will not apply to a return if it is:

  • The 1st VAT return for a new registration
  • The Final VAT return when you cancel your registration
  • One-off returns covering a timescale different to a month, quarter or year (say a return of four months which might happen when there’s a change in your VAT Return cycle)

But it would cover a Nil VAT Return or a Repayment Return.

Late payments of VAT are caught under the same rules.

At a time when cashflow challenges exist for many, it’s important to look at whether your VAT processes and the environment you operate in, can offer VAT benefits to ease cashflow pressures – opportunities can exist, it’s a question of their relevance to your organisation. HMRC’s ongoing mantra is to ensure taxpayers pay the “Right Tax at the Right Time” and this new penalty regime does offer a more proportionate outcome than the previous model, they would argue, but a £200 penalty is still £200 lost.

If you’re worried about managing your VAT liabilities and payments to HMRC you can get on the front foot with HMRC by agreeing a “time to pay” payment plan – talk to our accountants in the Xeinadin Group and if VAT issues prove a challenge in 2023 then just email us at

For the avoidance of doubt, the content recorded in this news article does not constitute formal advice and we do not guarantee the accuracy of any information provided at the time of reading. It is always recommended that you seek professional advice before acting on any of the news articles or information

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