Historically, VAT surcharges for late submission of VAT returns have been criticised for being disproportionate, and out of line with similar charges for other taxes.
The surcharge level is currently the same (a fixed percentage of the VAT due, from 2% up to 15%) regardless of whether the VAT was paid 1 day or 1 year late.
HMRC are attempting to make the system fairer with a new regime.
What will the new late payment penalties regime look like?
Under the new regime:
When will the reforms happen?
The reforms come into effect:
The reforms, shaping a fairer system with reduced surcharge penalty percentages will be welcome to both taxpayers and advisers. With any new system, there are likely to be teething problems and businesses are advised to take advice if surcharges have been issued incorrectly.
Finally, it’s worth a reminder that under both the current and new regime, businesses that have received surcharges may be able to appeal and our team can help with this.
If you need our advice please get in touch at firstname.lastname@example.org
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