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UK Introduces New VAT Penalties Regime

The United Kingdom introduces a new penalties regime from January 1, 2023, for value-added tax non-compliance.

The new rules will introduce penalties calculated on the amount of tax outstanding and how long the late payment is overdue for the late payment of tax due to HMRC.

A new penalty points-based system will apply for late submissions of tax returns. Under the new regime, a penalty of GBP 200 for late submissions will only be issues when the relevant points threshold is reached.

Leniency will be granted to instances required to file regularly and points will accrue separately for instances of non-compliance in relation to VAT and income tax self-assessment; 5 points for monthly filers; 4 points for quarterly files; and 2 points for annual filers.

Taxpayers will be able to reset their points to zero by submitting all returns before the due date for a set period: 24 months, for annual filers; 12 months, for quarterly filers; and 6 months, for monthly filers. They must also have filed all outstanding returns for the previous 24 months.

Initially, the new regime for VAT was to enter into effect from April 1, 2022.

However, the regime is now being introduced for accounting periods starting on or after January 1, 2023.


If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact or your usual A.C.T. contact.


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