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The updating of the H M Revenue & Customs penalty regime is shortly to include late filing and late payment of VAT. The changes are dependent on HMRC’s amendments to their computer systems and therefore the exact date is unknown as yet. The new penalties will replace the current default surcharge regime, which can result in no penalty if no further returns are late within a year.
Late Filing Penalty
The new penalty for the first late VAT return is £100 even if the subsequent filing of the return results in a repayment. At the point of the first late return the penalty period starts. This is initially one year, but each further late return will extend the penalty period to the anniversary of the most recent penalty period.
The penalty for a second late return is £200, third is £300, fourth is £300 and fifth and subsequent returns are £400.
Returns that are more than 6 months late will also attract an additional penalty of 5% of the VAT due and an additional 5% will be charged if a return is more than 12 months late.
Late payment penalty
Late payment penalties of 2% – 5% are also due on the second and subsequent late payments with in a penalty period.
This new structure will greatly increase the amount of penalties that small businesses pay when they are late with their VAT returns and payments. The message from HMRC is if you don’t want to pay then submit returns and payment by the due date.
We will keep you updated with developments and dates when they are known, but in the meantime, if you require any further explanation, please contact Haxton Chartered Accountants.

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