New VAT penalties

VAT penalties

All VAT-registered businesses must now comply with the MTD for VAT regulations, which means keeping VAT records in a digital format and using MTD-compatible software to submit VAT returns.

The previous portal used for submitting VAT returns online closed on 1 November 2022, or shortly afterwards for certain businesses. For VAT periods beginning on and after 1 January 2023, HMRC will levy one penalty point for each VAT return submitted late. The point is levied whether there is VAT to pay or a repayment is claimed on the return.

Collecting four points will result in a £200 penalty for quarterly VAT returns. Those who submit monthly VAT returns will receive a £200 penalty on receiving their fifth penalty point.

Every subsequent late filing incurs another £200 penalty until you have filed four successive quarterly VAT returns on time, or six monthly VAT returns promptly.

You will be able to appeal against each penalty point and monetary penalty, something we can help you with.


Contact us if you have any concerns about all the new VAT compliance requirements.