New penalties for submitting VAT returns or paying VAT late

What will happen if you submit a VAT return late
For VAT periods starting on or after 1‌‌‌ ‌‌January 2023, penalties for submitting VAT returns late will work on a points-based system. One penalty point will be given for each VAT return submitted late.

If you reach your points threshold, you will have to pay a fixed £200 penalty. You will also have to pay another £200 penalty, each time you submit your VAT return late while you are at the threshold. Your points threshold will depend on how often you need to submit a VAT return.

You can find more information on how late submission penalties work, the points threshold and how to avoid a penalty on GOV‌‌‌.UK. There’s also information on how to remove penalty points you’ve received after submitting your VAT return late.

What will happen if you do not pay your VAT on time
If your payment is more than 15 days overdue, you will have to pay a first late payment penalty. If your payment is more than 30 days overdue, you will also have to pay a second late payment penalty.

You can find more information about how late payment penalties work and how to avoid them on GOV‌‌‌.UK.

You will also be charged late payment interest from the day after your VAT payment is due to the day you pay in full. Interest will be calculated at the Bank of England base rate plus 2.5%. You can find more information about how late payment interest works on GOV‌‌‌.UK.

How HMRC are supporting you to get used to the new penalty system in the first year
To help you get used to the new penalty system, HMRC won’t charge a first late payment penalty on VAT payments due on or before 31‌‌‌ ‌‌December 2023, if you either:

How HMRC are supporting you to set up a payment plan

They’re here to help if you can’t pay your VAT bill in full. You may be able to set up a payment plan to pay your bill in instalments.

After 31‌‌‌ ‌‌December 2023, if you request a payment plan from HMRC within 15 days of the payment being due and we agree it, you will not be charged a late payment penalty for periods starting on or after 1‌‌‌ ‌‌January 2023. You must also ensure you keep to the conditions of the payment plan.

You will still have to pay late payment interest on overdue payments, even if you have a payment plan in place.

If you don’t request a payment plan within 15 days or HMRC don’t agree it, you will be liable to pay late payment penalties.