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VAT late filing penalties

Newsletter issue – January 2023

VAT registered businesses must now use MTD-compatible software to file VAT returns, as the old online form where you typed in your VAT figures has been closed.

To encourage businesses to file on time under the MTD regime the late filing penalties are being separated from the late payment penalties for VAT periods beginning on and after 1 January 2023.

Late filing penalties will be based on points awarded for each late submission. A penalty is levied only when the appropriate points threshold is reached, which depends on how regularly the return is filed:

  • Annual returns – 2 points
  • Quarterly returns – 4 points
  • Monthly returns – 5 points

Taxpayers who file quarterly VAT returns will receive a flat £200 penalty on the fourth late submission. Each subsequent late filing will also trigger another £200 late penalty until the points slate is wiped clean by a period of perfect compliance.

Perfect compliance means being up to date with all outstanding VAT returns and filing current VAT returns on time for 12 months (6 months for monthly returns, 2 years for annual returns).

If you do not always file your VAT return on time because you regularly receive VAT repayments, you must do so in future. All late filed VAT repayment claims will attract points and penalties. There is no soft-landing for this new late filing regime.

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