Newsroom, VAT | 20. December 2022

UK: VAT penalties and interest from 1 January 2023

HM Revenue & Customs (HMRC) has made regulations to bring into force the new penalty and late payment interest regime for late filing and payment of VAT from 1 January 2023. by

Finance Act 2021: (Value Added Tax) (Penalties) (Appointment Day) Regulations, SI 2022/1278:

This means that the new penalties for late filing and payment (in FA 2021 Schs 24 and 26) will be effective for accounting periods beginning on or after 1 January 2023.

Finance Act 2009, Finance Act (No 3) 2010 and Finance Act 2021 (Value Added Tax) (Interest) (Appointment Day) Regulations, SI 2022/1277:

Application of sections 101 and 102 of FA 2009 for VAT purposes from 1 January 2023. These sections provide interest on late payment of sums due to HMRC and interest on repayment of sums due from HMRC. Regulation 3 is worth noting in that it contains specific effective date provisions to ensure that the Regulations apply correctly to the various penalties that apply only to VAT (e.g. for false zero-rated certificates or invoice irregularities).

Finance Act 2009: sections 101 and 102 (VAT) (interest on arrears and interest on repayments) (exceptions and consequential amendments) Order, SI 2022/1298:

Non-application of the existing interest rules (to ensure that only the new restrictions apply). An important point is the non-application of VATA 1994 s 79, which means that the repayment surcharge no longer applies as the harmonised repayment interest regime has replaced it. These Regulations make the necessary amendments to VATA 1994 and other existing legislation to ensure that the new regime operates as intended.

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