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

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