Penalties ― late payment of VAT

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note sets out how the penalty regime for the late payment of VAT applies for VAT accounting periods commencing on or after 1 January 2023.

For separate penalties associated with the late submission of VAT returns, see the Penalties ― late submission and failure to submit returns guidance note.

These two penalty regimes replace the default surcharge regime.

See also De Voil Indirect Tax Service V5.383.

Penalties for late payment of VAT ― the basics

April 2025 onwards

In the Spring Statement 2025, it was announced that penalties for late payments will be increased from April 2025, as follows:

•
3% of the tax outstanding where tax is overdue by 15 days
•
plus 3% where tax is overdue by 30 days
•
plus 10% per annum where tax is overdue by 31 days or more

The penalty rates outlined below will apply until April 2025.

Spring Statement 2025

Periods to April 2025

Under the penalty regime for late payment of VAT no penalty should be charged

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