VAT penalties
Produced in partnership with Pinsent Masons
VAT penalties

The following Tax guidance note Produced in partnership with Pinsent Masons provides comprehensive and up to date legal information covering:

  • VAT penalties
  • Civil penalties
  • Criminal penalties

FORTHCOMING CHANGES: HMRC intends to make wide-ranging changes to the rules on tax penalties, as part of its 'Making Tax Digital' reforms and a wider penalty review. These changes were intended to be in Finance Bill 2019 (see News Analysis: Legislation day: Draft Finance Bill 2019—Tax administration) but at Budget 2018 the government announced that they would be deferred to a future Finance Bill. The proposals include:

  1. Late submission penalties: Replacing late filing penalties with a new system of late submission penalties using a points-based model. The amount of the penalties has yet to be announced. The new model will, in conjunction with the new late payment penalties, replace the VAT default surcharge

  2. Late payment penalties: Replacing the current late payment penalties with a hybrid regime of penalties and penalty interest. Half the penalty, which will be an as yet unspecified percentage of the unpaid tax, will arise when a payment is late by 15 days; the second half of the penalty will arise when a payment is late by 30 days; followed by penalty interest from 30 days (at a rate not yet set) (in addition to late payment interest). Suspension of penalties will be available where there are suitable time to pay arrangements put in place with HMRC

This Practice Note describes the circumstances in which a