Value Added Tax

Penalties and interest for late payment

Produced by Tolley
  • 30 Nov 2021 09:21

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

  • Penalties and interest for late payment
  • Introduction
  • Which payments are covered by the provisions?
  • What penalties are payable?
  • First penalty
  • Second and subsequent penalties
  • Time to pay (TTP)
  • Does HMRC have the discretion not to levy a penalty?
  • How is the penalty assessed?
  • Is late payment interest due?
  • More...

Penalties and interest for late payment

This guidance note provides an overview of the revised penalty regime coming into effect for VAT accounting periods commencing on or after 1 April 2022 for late payment of VAT. This penalty regime is the second part of the replacement of the default surcharge regime.

This note should be read in conjunction with the Penalties for late submission or failure to make a return guidance note.

For more detailed commentary, see De Voil Indirect Tax Service V5.383.

Introduction

The penalty regime enables HMRC to levy two penalties:

  1. a penalty for failing to submit the VAT return by the due date. See the Penalties for late submission or failure to make a return guidance note for more information, and

  2. a penalty for failing to pay the VAT due on a return by the due date. The penalty is applicable regardless of the date the return to which the payment relates was submitted

This guidance note provides details of the penalty due for late payments.

Which payments are covered by the provisions?

The following payments are covered by the late payment penalty provisions:

  1. amounts due on a VAT return

  2. payments on account

  3. payments due under the annual accounting scheme

  4. payments due in respect of an assessment issued where the return has not been submitted

  5. payments due where the VAT return has been adjusted or amended

  6. the amount shown on an assessment or determination made by HMRC

FA 2021, Sch 26, para 1

What penalties are payable?

No penalty is due under these provisions where:

  1. the amount

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