A: There is a new penalties system for all VAT periods that start on or after the 1st January 2023. Firstly, if the 03/23 VAT return is not submitted on time then the client will incur 1 point (4 points means a £200 penalty). As far as payment of the VAT return is concerned, then as long as he pays the net VAT due within 30 days of the due date then he will not incur a penalty (this reduces to 15 days for 2024 returns onwards). However that will not stop him incurring interest for every day after the due date that the net VAT remains unpaid at Bank of England base rate +2.5%. All traders start with a clean slate for their VAT returns starting in 2023 so for this client, being in the 15% surcharge category at the end of 2022 has no impact on how penalties are applied to late 2023 returns.
These publications from Markel Tax were correct at the time of going to press and should be considered as principles-based guidance only. To check current validity, call the Markel Tax helpline. ICAEW (as distributor) disclaims all liability for any errors or omissions.
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Markel Tax offers expert advice on UK tax and VAT via its helpline and provides monthly FAQs with questions and answers on common tax issues for businesses and practitioners.
