VAT Returns
For VAT there has been a change to the way penalties and interest are charged after 1st January 2023.
The new penalties replace the default surcharge and now also apply to anyone submitting nil or repayment returns too!
Late submission penalties now work on a points-based system. For each return you submit late, you will receive a penalty point until you reach the penalty point threshold.
When you reach the threshold, you will receive a £200 penalty. You will also receive a further £200 penalty for each subsequent late submission while you are at the threshold.
The penalty point threshold is set by your accounting period. The threshold is the maximum points you can receive.
| Accounting period | Penalty points threshold |
| Annually | 2 |
| Quarterly | 4 |
| Monthly | 5 |
The penalty regime for late payments has also changed.
Late payment penalties can apply to most payments of VAT not paid in full by the relevant due date.
For late payment penalties, the sooner you pay, the lower the penalty amount will be. You can propose a payment plan at any time which could mean you receive lower or no penalties.
From the first day your payment is overdue, until you pay in full, HMRC will charge late payment interest. You will get a first late payment penalty if your payment is 16 or more days overdue.
You should contact HMRC as soon as possible if you are having difficulty paying by the deadline.
When your payment is 31 or more days overdue, your first late payment penalty increases, and you get a second late payment penalty.
| First late payment penalty | Second late payment penalty | |
| Payment up to 15 days overdue | None | None |
| Payment between 16 and 30 days overdue | Calculated at 2% on the VAT you owe at day 15. | None |
| Payment 31 days or more overdue | Calculated at: • 2% of what was outstanding at day 15 • plus 2% of what is still outstanding at day 30 | Calculated at: •a daily rate of 4% per year on the outstanding balance •charged everyday from day 31 until the outstanding balance is paid in full |
Self Assessment
The deadline for filing and paying a self assessment tax return is 31st January after the tax year has ended, so for the tax year end 5th April 2023 the deadline would be 31st January 2024.
Paper tax returns have an earlier deadline of 31st October after the tax year has ended.
If your tax liability, excluding Class 2 National Insurance, is over £1,000, you are required to make two payments on account towards the following year’s tax liability. These payments are due by 31st January and 31st July each year.
If you are late submitting your tax return the penalties are:
- 1 day late – £100
- Up to 3 months late – a further £10 per day, capped at 90 days
- 6 months late – an additional £300 or 5% of the tax due, whichever is higher
- 12 months late – a further £300 or 5% of the tax due, whichever is higher.
- In the most serious cases you may be fined 100% of the tax due.
You will also have interest charged on any late payments made.
If a partnership tax return is not submitted on time, each partner will be issued with a fine in line with those listed above, plus an additional fine for the partnership return itself.
Limited Company Accounts
The deadline for a limited company to submit abridged accounts to Companies House is 9 months after the accounting period end date.
You will also have 9 months after the accounting period end date to pay any Corporation Tax due to HMRC or to notify them that no tax is due, but 12 months to submit the company’s Corporation Tax return to HMRC.
The penalties for late filing can be severe.
If the company accounts are filed late at Companies House, the following fines will apply:
- Up to 1 month late – £150
- 1 – 3 months late – £375
- 3 – 6 months late – £750
- More than 6 months late – £1,500
If your accounts are late two years in a row the penalties will double.
If the company does not file its Company Tax Return on time, the following fines will apply:
- 1 day late – £100
- 3 months late – a further £100
- 6 months late – an additional penalty of 10% of the unpaid tax as estimated by HMRC
- 12 months late – a further penalty of 10% of the unpaid tax
If your Company Tax Return is late three times in a row, the £100 penalties are increased to £500 each.
PAYE and P11Ds
You must submit a Full Payment Submission (FPS) to HMRC on or before the date you pay any employees.
If you do not send the submission on time, you may be fined depending on the number of employees you have.
- 1 to 9 employees – £100
- 10 to 49 employees – £200
- 50 to 249 employees – £300
- 250 or more employees – £400
If you pay your PAYE monthly, your payment needs to be received by HMRC by the 22nd of the month following the end of the tax month. For example, for the period 6th April – 5th May HMRC will need to have received payment by 22nd May.
If paying quarterly the deadline is the 22nd after the end of the quarter. For example, for the period 6th April – 5th July the payment would be due by 22nd July.
If paying HMRC by cheque the deadline is shortened to the 19th of the month.
If you do not pay your PAYE on time, HMRC will issue penalties as a percentage of your liability dependant on the number of times you have been late paying in the tax year:
- 1 to 3 defaults – 1%
- 4 to 6 defaults – 2%
- 7 to 9 defaults – 3%
- 10 or more defaults – 4%
You will also be charged interest daily on any unpaid amounts. Further penalties of 5% of the unpaid amounts will be applied after 6 months and 12 months.
You will need to report any benefits in kind provided to your employees on form P11D and the corresponding National Insurance due on form P11D(b) by 6th July following the end of the tax year.
You must pay the Class 1A National Insurance to HMRC by the 22nd July, or 19th July if paying by cheque.
You will receive a penalty of £100 per 50 employees for each month or part month that your P11D(b) is late. You will also be charged penalties in line with those above and interest if you are late paying the Class 1A National Insurance.
Whatever the tax and deadline concerned, we can help ensure that your submissions and payments are always made on time.