VAT penalty overhaul confirmed for 2022
The 2021 Budget confirmed that the government is pressing ahead with a change to the way penalties for VAT returns filed late will be charged. What’s happening?
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Loan Charge settlement offers begin to land
HMRC has begun sending formal settlement offers to individuals and employers with outstanding Loan Charge liabilities, alongside detailed new guidance explaining how offers will be calculated and how long recipients have to respond. What’s the full story?
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The hidden income tax benefit of marriage
You recently got married and a relative joked that you can save lots of money because of the tax breaks for married couples. As a newlywed are you entitled to a reduction in your income tax bill?
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September deadline to opt out of winter fuel payment
Pensioners whose income is over £35,000 have only days left to opt out of the 2026/27 Winter Fuel Payment and avoid having it recovered through the tax system. What do you need to know?
Currently, penalties for late filing of VAT returns and late payment of VAT are dealt with under the default surcharge regime. This means that where either a return is filed late, or a payment is received late, the business receives a surcharge notice. They are then “on notice” for twelve months, with further defaults penalised by a charge calculated by reference to the tax due. There are several perceived faults with this system. Firstly, a business can avoid a charge for late filing by paying the VAT due in full. Secondly, there is no difference in the level of penalty for a return or payment made one day late compared with one made months late. But all that will change from 1 April 2022.
From that date, there will be separate penalties charged for late filing and late payment. Additionally, the penalties will increase in stages – punishing those who file or pay significantly later more than those who miss deadlines by a few days. A key feature of the new system is that it will no longer be possible to avoid a late filing penalty if the VAT is paid on time, or if the return shows a repayment is due.
Full details of the announcement can be found here.
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