Commentary

V5.383 Penalties for failure to make payment on time

Part V5 Compliance, enforcement and appeals

V5.383 Penalties for failure to make payment on time

V5.383 Penalties for failure to make payment on time

Penalties for failure to make payment on time—introduction

The provisions are contained in Finance Bill 2021, cl 113, Sch 25. They come into force on such day as the Treasury may by regulations appoint (as noted above, they are expected to apply in relation to VAT accounting periods commencing on or after 1 April 2022)1.

The second part of the replacement of the default surcharge regime introduces a discrete penalty for failing to pay the amount of VAT due in respect of a return by the due date, regardless of the date of the submission of the return itself. In outline, the regime provides for:

  1.  

    •     an initial penalty linked to the amount of VAT outstanding at the due date, unless payment is made within 15 days of that date, or the '15 day time to pay condition' is met

  2.  

    •     an increased penalty linked to the amount of VAT outstanding at the due date, unless payment is made within 30 days of that date, or the '30 day time to pay condition' is met

  3.  

    •     a further penalty based on the amount of VAT outstanding at the end of the 30-day period

The provisions are set out in more detail below.

Failure to make payment on time—payments to which the provisions apply

The penalty provisions apply to2:

  1.  

    (1)     amounts payable under VATA 1994, s 25(1) (VAT liability for a prescribed accounting period), including payments on account (see V5.110)

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