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  • Writer's pictureTLC Chartered Accountants

Upcoming changes to VAT penalties - 2023

From 1 January 2023, HMRC are replacing the default surcharge with new penalties for submitting VAT returns late or by paying VAT late.

If your accounting period for your VAT return starts on or after the 1 January 2023, you will be affected.

There are two penalty systems:

  1. Late Submission Points-based system: each VAT return that is submitted late you will receive one late submission penalty point. The penalty points can vary depending on the frequency of submissions.

Submission frequency and penalty points threshold:

Monthly - five points

Quarterly - four points

Annually - two points

Once you reach the penalty threshold you will receive a £200 penalty from HMRC.

2. Unpaid / Late VAT Payment: if you miss a payment or make a payment late you will incur interest.

Up to 15 days overdue - no penalty payable

Between 16 and 30 days overdue - 2% penalty on the amount outstanding at day 15

After 30 days overdue - further 2% penalty on the amount outstanding at day 30

Late payment interest will be charged from day 1 at the interest rate of 2.5% (same as Bank of Scotland).


  1. Set up a Direct Debit

  2. Enter into a time-to-pay arrangement

  3. Submit returns on time

  4. Make part payments - penalties charged according to anything unpaid after days 15 and 30

or call the office on 01255 436000 to speak to a member of staff.

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