HMRC have announced that changes to the VAT penalty and interest rules due to come into force from April 2022 are to be delayed to 1 January 2023.

The current late filing and payment penalty system for VAT is to be replaced by a Points-based late filing penalty regime and a new Late payment regime. The new regimes were originally due to take effect for VAT accounting periods beginning on or after 1 April 2022 but have been delayed and will now only apply to accounting periods beginning on or after 1 January 2023. Reforms to the VAT interest payment rules to bring them into line with those for Income Tax which have also been delayed to January 2023.

No other changes have been made to the new rules. The delay of their introduction is thought to be to give HMRC more time to update their systems. The new rules apply to those mandated into Making Tax Digital for Income Tax from April 2024 and all other Self Assessment taxpayers from April 2025.

The advantage of the change in date is that the new rules will no longer come into force at the same time as the extension of Making Tax Digital for VAT to all VAT registered businesses, which applies from April 2022.

Useful guides on this topic

Penalties (VAT)
When do penalties apply for VAT? What penalties are charged and how can they be mitigated?

Penalties: Late Filing MTD
A points-based late submission penalty regime is replacing existing late submission penalties for VAT and Income Tax Self Assessment (ITSA) under Making Tax Digital.

Penalties: Late Payment MTD
Penalties for late payment of tax under Making Tax Digital for VAT and Income Tax.

Penalties: Late Filing
Late returns can be subject to a mix of fixed and tax geared penalties. What penalties apply for late filing? Which penalty will apply and when? 


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