HMRC are changing their penalty regime for late submissions of VAT returns.

Freelance Desk Work

HMRC are changing their penalty regime for late submissions of VAT returns from VAT periods starting on or after 1 January 2023. There will now be penalties for late submission, even if no VAT is due to HMRC.

The new regime works on a points-based system. For each VAT return you submit late, you will receive one late submission penalty point. The penalty points build up, and once you reach a threshold, you’ll get a £200 penalty, and a further £200 penalty for each subsequent late submission.

For Quarterly VAT returns – its 4 points within 12 months
For Annual VAT returns – its 2 points within 24 months
For Monthly VAT returns – its 5 points within 6 months

You can ‘reset’ your points back to zero if you submit your VAT returns on time (the next 12 months for quarterly, 24 months for annual, and 6 months for monthly).

If you pay your VAT late, there will be penalties depending on how late you are at paying the VAT, as well as interest:

  • Up to 15 days – no penalty
  • 16-30 days – 2%
  • 31 or more days – Another 2%

If you are struggling to pay your VAT, it is highly recommended to set up a payment plan with HMRC, to reduce the penalty period.

HMRC won’t be charging a first late payment penalty for the first year from 1 January 2023 until 31 December 2023 if you pay in full within 30 days of your payment due date.

From 1 January 2023, HMRC will charge late payment interest from the day your payment is overdue to the day your payment is made in full. This is at the Bank of England base rate plus 2.5%.

To find out more, go to

If you are interested in learning more about our bookkeeping and accounting services or any aspect of business finance and payments, get in contact with the experienced team at Wellden Turnbull today.