HMRC (HM Revenue and Customs) has issued a warning to VAT-registered businesses in the UK to ensure that they file their VAT returns and pay the due amount on time. This is because new penalties have been introduced by HMRC, which will be applied in a fairer and more proportionate manner to businesses who submit their VAT returns or pay their VAT late.
The penalties, which were introduced on 1 January 2023, replace the previous VAT default surcharge and will apply to accounting periods that start after that date. The new penalties include late payment penalties and points-based late submission penalties. The first monthly returns and payments affected by these new penalties are due by 7 March 2023.
Under the new penalties system, businesses who fail to submit their VAT returns or pay the due amount on time will receive points for each late submission or payment. If a business accumulates a certain number of points within a specific period, they will receive a penalty based on their points score. The amount of the penalty will depend on the points score and the frequency of the late submissions or payments.
HMRC has emphasized that the new penalties are designed to be fairer and more proportionate to businesses, and will only be applied in cases where there is a persistent failure to comply with VAT regulations. However, it is important for businesses to be aware of the new penalties and ensure that they file their VAT returns and pay their VAT on time to avoid incurring penalties.
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