Making Tax Digital for VAT – Penalties for Late Filing and Late Payment

HM Revenue & Customs (HMRC) has announced two penalty systems for late filing and late payment of VAT under their Making Tax Digital (MTD) programme for VAT. These penalty systems are due to come into effect in April 2019, and we gibe brief details here. Whilst VAT is not part of payroll, the on-going process of MTD could easily see such penalties being extended into the PAYE arena. Watch this space

What are the Penalties?

Late filing of VAT returns will attract penalty points. These will accrue dependant on how late the filing is and how many filings have been submitted late. After four late submissions, a penalty will be charged for each late submission made. After four compliant submissions, ANY ACCUMULATED points will be removed.

A separate system will apply to late payments of VAT owed. Penalties will ‘kick in’ once payment is 15 days late and will then double once the 30 days late mark has been reached. After 30 days, penalties will be charged on a daily basis.

There will be an initial soft landing

There will be a ‘soft landing’ period for late submissions during the first year of Making Tax Digital for VAT, meaning that the ‘true’ starting date will be 1st April 2010. However, this soft landing will not apply to the requirement for digital record keeping. These must be in place straightaway.

What About Payroll and Making Tax Digital?

Making Tax Digital is an ongoing programme for HMRC, so it seems sensible to predict that taxes related to payroll are on the agenda. All we know at this stage is that the Government stated in 2017 that Making Tax Digital will not apply to other taxes until 2020 at the earliest.

For help and advice on all things payroll, please contact us or call us on 0121 422 0550. We specialise in running the payrolls of SMEs, and you can be sure we are always 100% up to date with payroll rules and regulations.

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