The VAT penalties outlined in HMRC’s document are set to come into force in April 2022. These late submission penalties will affect taxpayers who fail to meet their obligations to provide returns and other information requested by HMRC on time.
An automatic financial penalty will no longer be issued if taxpayers fail to meet a submission deadline. Instead, taxpayers will incur a certain number of points for missed obligations before a financial penalty is issued. The new points-based regime, similar to that of driving offenses, is designed to be proportionate and will penalise only the small minority who repeatedly miss their submission deadlines rather than those that make occasional mistakes.
Taxpayers will receive a point every time they miss a submission deadline. HMRC will notify the taxpayer of each point. Once a taxpayer reaches a certain threshold of points (this will be determined by the number of times a taxpayer has to make a submission) a £200 penalty will be charged. A further penalty will be issued for every subsequent failure to make a submission on time, but their points total will not increase.
Taxpayers will be able to challenge a ‘point’ or a ‘penalty’ through both an internal HMRC review process and an appeal to the First Tier Tax Tribunal. Grounds for appeal would include ‘reasonable excuse’ for missing the deadline. The appeals process will be the same as the appeal process against the assessment of tax.
The Bedrock team includes a number of VAT specialists so if you need help with the complex regulations around VAT get in touch today.