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

Latest British news

UK HMRC wins catering VAT case

February 4, 2019

HMRC has won a tax tribunal ruling which held that the sandwich shop chain, EAT Limited, had to charge 20% VAT on its bacon breakfast muffins and grilled ciabatta bread products. EAT is now obliged to settle a £632,620 VAT bill for failing to levy VAT on these products.

EU VAT and tax veto review

January 25, 2019

The European Commission (EC) has proposed switching from unanimous to majority voting on EU VAT and other tax policies.  The aim is to progress fiscal reforms which face immovable opposition from just a limited number of member states. 

UK MTD pilot open to VAT groups

January 24, 2019

HMRC has extended the Making Tax Digital for VAT pilot to members of VAT Groups. MTD will require over 1 million businesses above the £85,000 VAT registration threshold to record