The system of penalties for VAT and Income Tax Self-Assessment are changing due to a change of rules set by the Government.
The reason for these changes are to help intercept the non-compliant taxpayers, who are regularly failing to meet obligations of providing information requested by HMRC and their returns.
In replacement of the current system with automatic financial penalties, there will be a new points based system put in place. This will call for taxpayers to incur a certain amount of points raised by missed obligations before they are issued with a financial penalty.
These changes will apply to VAT customers for accounting periods beginning on/after 1 April 2022.
How will the new Late Submission Penalties work?
For every submission deadline missed, a point will be received. You will be notified of this by HMRC on every occasion.
Once you hit a certain number of points, you will receive a financial penalty of £200.
These are the penalty thresholds:
Bear in mind that not only will a penalty be issued for the failure to submit on time, but every subsequent failure also. Those who continuously fail to meet their obligations will accumulate some hefty fines.
Points will only be applied to each type of submission you need to make, meaning each obligation will have their own point total.
For example, if you miss deadlines for separate submissions both in the same month, you will be penalised for each submission type separately.
If you’re concerned about these changes or would like to know more, please get in touch with our team at firstname.lastname@example.org