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.

Delay Penalty interest
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. 

Latest British news

UK Intrastat required after Brexit?

Nov 27, 2019

HMRC has been issuing conflicting guidance on the obligation for UK traders with the EU to continue submitting monthly goods movements reporting - Intrastat - after Brexit. It had been expected that

UK MTD 2020: 3 major changes for 1.3 million businesses

Nov 5, 2019  

On 1 April 2020, phase 2 of Making Tax Digital (MTD) for VAT starts with the ending of the UK's HMRC's 'soft landing' first phase. It is this second phase that will cause most issues

UK HMRC confusion on post-Brexit Intrastat filings

Nov 2, 2019  

In the run-up to the latest missed Brexit date of 31 October, there has been conflicting messages from HMRC on whether Intrastat filings will still be required from thousands of UK businesses