HMRC has recently clarified the position in respect of the new VAT penalties which take effect for accounting periods commencing from 1 January 2023 and in particular the soft landing that will allow for a period of familiarisation with the new rules.
The late payment penalties commence by reference to the accounting period start date. However, the period of familiarisation will be applied by reference to the payment due date.
HMRC has provided the following examples:-
- For a payment due on 7 January 2023 in relation to a return for 1 September – 30 November 2022 – this will still be subject to the current default surcharge rules, as the period started on or before 31 December 2022;
- For a payment due on 7 May 2023 in relation to a return for 1 January – 31 March 2023 – this will be subject to the new late payment penalties (as the period started on 1 January 2023) with the period of familiarisation applying (because the payment is due between 1 January 2023 and 31 December 2023); and
- For a payment due on 7 February 2024 in relation to a return for 1 October – 31 December 2023 – this will be subject to the new late payment penalties (as the period started on or after 1 January 2023) but will not be subject to the period of familiarisation (because the payment is due after 31 December 2023).
The “Prepare” page on GOV.UK provides a general overview of these changes. More detailed guidance will be published in due course.