Penalties ― late submission and failure to submit returns

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This note sets out the points-based penalty regime that applies when a business fails to submit a VAT return or submits a return late. The rules come into force for VAT return periods that start on or after 1 January 2023 as part of the replacement of the ‘default surcharge’ regime.

For penalties associated with late payment of VAT, see the Penalties ― late payment of VAT guidance note.

See also De Voil Indirect Tax Service V5.382.

Late submission penalties ― the basics

For VAT return periods that start on or after 1 January 2023, a points-based penalty regime applies where a person fails to submit their VAT return on time.

Under this penalty regime, a business that fails to submit its return on time is awarded a penalty point. When the number of penalty points reaches a penalty threshold, then a financial penalty of £200 is issued.

The points threshold that triggers the penalty depends on the frequency with which VAT returns are due to be submitted.

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