Value Added Tax

Penalties for late submission or failure to make a return

Produced by Tolley
  • 18 May 2022 14:02

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Penalties for late submission or failure to make a return
  • How do the late submission penalties work?
  • What are the penalty thresholds?
  • Do the points expire?
  • What are the time limits?
  • What penalties are imposed?
  • What happens if the VAT return reporting periods are amended?
  • VAT groups
  • Discretion, reviews and appeals
  • Discretion
  • More...

Penalties for late submission or failure to make a return

This note provides a summary of the legislation introduced in FA 2021 which replaces the default surcharge with a new penalty for late submission or late payment of VAT for VAT returns due on or after 1 January 2023. These rules were initially to be introduced from 1 April 2022 but their introduction was delayed.

For penalties associated with late payment of VAT, see also the Penalties and interest for late payment guidance note.

For further detailed commentary, see De Voil Indirect Tax Service V5.382.

How do the late submission penalties work?

The late submission penalties are points-based and apply to businesses that are required to submit a VAT return. Businesses will receive a point each time a submission deadline is missed. HMRC will notify the business that it has been issued with a point.

Once a certain penalty point threshold (which is determined by the frequency that returns need to be submitted) has been exceeded, a financial penalty will be imposed. A penalty will be imposed for each subsequent failure to make a submission on time. The points total will however not increase.

What are the penalty thresholds?

Penalties will be levied once the relevant point thresholds below have been exceeded:

VAT return submission frequencyPenalty threshold
Monthly (includes non-standard return periods not exceeding five weeks)Five points
Quarterly (includes non-standard return periods that

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