Making Tax Digital - penalties
With the 1 April 2019 launch of the UK’s Making Tax Digital (MTD) initiative for VAT recording and filing, HMRC has taken the opportunity to update the VAT penalty regime to bring it into line with income and corporation taxes.
The new regime will be as follows:
Penalties for late VAT MTD submissions
The UK is introducing a penalty points system from 1 April 2020. The will be as follows:
- One penalty point for a missed VAT return
- A fine after four accumulated points for a missed quarterly VAT return
- A fine after four accumulated points for a missed monthly VAT return
Accumulated points expire two years after they are imposed.
Interest charges for late VAT MTD payments
In addition to penalties for late submission, there will also be interest charges.
|Late by 15 days||No penalty|
|Late payment between 15 days and 30 days||50% of HMRC interest rate charge|
|Late after 30 days||100% of HMRC interest rate charge, plus daily interest charge|
Need help with your UK VAT compliance?
Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.
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March 5, 2019
HMRC estimates that 245,000 businesses buy and sell goods with other EU27 states. When the UK leaves the Customs Union, 29 March, all movements of goods must be declared for customs, tariffs and VAT. This requires an EORI number (Economic Operator Registration Identification), which is shown on customs declarations etc.
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HMRC is writing to thousands of UK, US and other international sellers of digital services to warn them to now VAT register in another EU state in readiness for a no-deal Brexit. This covers their sales of e-services, apps, streaming media, online gaming and dating, e-books and software to EU consumers.
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