Interest harmonisation
From 1 April 2022, HMRC will harmonize interests related to late payment that deals with untimely payments of British VAT and ITSA. From 1 April 2022, late payments will be handled as follows:
- All companies are given 15 days from the deadline to pay VAT without consequential fines.
- If the VAT is paid 16-30 days after the deadline, the fine is 2% of the VAT amount.There are no exceptions for first time reporting.
- If payment is made 31 days or later after the deadline, the fine will be settled as follows:
- 2% of the amount in the period 16-30 days after the deadline
- A surcharge of additional 2% more of the amount 31 days after deadline
- The second time a company does not pay on time, the fine is 4% p.a. of the outstanding amount. It is calculated daily from day 31 after the deadline.
The calculation of the fine is made on “outstanding amounts accruing”. This means that if the VAT amount / outstanding increases to HMRC, the fines are calculated on the basis of the accumulated outstanding VAT amount.
Penalties for late submission (proposed revision)
With Finance bill 2022, HMRC wants to introduce a points system that will regulate delayed or missing VAT reporting. This system will regulate the basis on which fixed penalties can be given to a company not filling in due time.
Points accrue to companies that do not submit the VAT report in due time. The points system thus has nothing to do with late payments but must penalize companies for non-timely delivery of the periodic VAT report to HMRC.
The financial fixed penalty is GBP 200.
If the VAT report is not submitted to HMRC in time, the company will receive 1 point. Depending on the company’s reporting frequency, these fixed penalties are generated according to resp. 2, 4 or 5 points.
The new penalty regime is designed to make sanctions for failing to file or pay on time simple, fair and effective to protect public finances by incentivising compliance and to strengthen confidence in the tax system.
