New penalty system for late VAT returns from 1 January 2023

Farmers beware! Exporters beware! Bookshops beware! Pharmacists beware!

Now that I have grabbed readers’ attention with my dramatic opening sentence I will explain the reason for my statement: for the first time in the 49-year history of the nation’s favourite tax a business or organisation could be charged a financial penalty by HMRC for submitting a late repayment return. Shock! Horror! Let’s complain to our MP … but I think it is an excellent policy decision and will reveal why.

I will also explain how the new ‘points makes penalties’ – rather than ‘prizes’ as the late entertainer Sir Bruce Forsyth used to say – system will work for VAT periods starting on 1 January 2023 and later.

Late VAT returns

In my previous Taxation article ‘Penalty cheer’ (20 October 2022 page 16) I explained how a new penalty system will take effect...