The current VAT default surcharge is being replaced with brand-new penalties that apply to everyone submitting a VAT return. These penalties are charged for any late submissions when you reach the relevant penalty point threshold.
Overall, the penalties for late payment depend on how long you’re late. Likewise, the way interest is paid on late VAT is also changing, so the repayment interest replaces the repayment supplement. Though your accountant in Cobham should know these things, it’s also important for you to understand them.
Important Dates
The new rules apply on VAT accounting periods that start 1 January 2023. However, there’s a period of familiarisation that begins from the first of the year in 2023 until 31 December 2023. Late payment penalties are not charged if you make the payment in full within 30 days from the date it was due.
Tips for Reducing or Avoiding Late Payment Penalties
Here are a few things you can do to avoid or reduce your late payment penalties:
• Direct Debit – It’s often easier to pay VAT returns through direct debit. Therefore, the HMRC automatically collects it three working days from the due date.
• Make Part Payments – Penalties get charged based on the tax owed at the end of 15 or 30 days. Therefore, you’ve got an incentive to pay as much on time as possible. Part payments could reduce the scope of interest and late payment penalties.
• Submit On-time Returns – Ensure that the returns are submitted on time, even if you’re not paying the tax owed on the due date.
Understanding the changes to VAT penalties is crucial, and most people aren’t familiar with the rules. Therefore, it’s wise to work with an accountant in Cobham. David Beckman & Co. Ltd. is an excellent choice.
