13 January 2022 
Andrea Marshall, Tax Specialist
Update on 13 January 2022
HMRC have announced this afternoon that the introduction of the later submission penalties have been delayed from 1 April 2022 until 1 January 2023.
The postponement covers the 2% penalties (that apply on day 16 and 30 for outstanding VAT) PLUS the new points based system that leads to £200 fines for non-production of documents or information requested by HMRC. For further infrormation, please see:
Interest harmonisation and penalties for late submission and late payment of tax
Penalties for late payment and interest harmonisation
These regimes also apply to Income Tax returns, but are being introduced in stages. So they come in for VAT on 1 January 2023, ITSA returns (with income over £10k) from the tax year beginning 6 April 2024, and for all other ITSA returns from the tax year beginning 6 April 2025.
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HMRC has updated its Policy Paper on Penalties for late payment and interest harmonisation.
VAT is being brought "in-line" with other tax regimes; the new regime will apply to VAT from 1 April 2022.
There are two late payment penalties that may apply; a first penalty and then an additional or second penalty, with an annualised penalty rate.
The first penalty applies as follows:
The second penalty applies from Day 31+, accruing on a daily basis at a rate of 4% per annum.
