Taking Account

Subscribe to our monthly e-newsletter.

  • Taking Account

VAT new penalties in the pipeline

July 2010

As well as the increase in the standard rate of VAT from 17.5% to 20% on 4 January 2011, HMRC are also replacing the present default surcharge fines, at some time in 2011, with new penalties.

The penalties will be applied to two situations:

  1. Late submission of a VAT return, and
  2. Late payment of VAT due.

Late filing of quarterly returns

Initially late filing will attract a penalty of £100 immediately after the due filing date.

The fine will be payable even if the liability on the return has been paid and for the first time VAT returns that show a refund of VAT will also be subject to the late filing penalty.

Any subsequent returns filed late within a year of the first return being filed late, will be charged £200 for the second, £300 for the third and £400 for the forth and subsequent returns.

Returns still outstanding after 6 months and again after one year will be charged an additional penalty based on 5% on the VAT due on the return.

If taxpayers withhold information that prevents HMRC from raising a correct assessment, there is a tax geared penalty of up to 100% of the VAT due.

Late payment of VAT

The first late payment does not attract a penalty but starts a penalty period of one year.

Subsequent late payments within the penalty year will result in a fine based on between 2% and 4% of the VAT due.

Hilton Sharp & Clarke