New VAT Late Payment Penalties: What Gravesend Businesses Need to Know

As your local Gravesend accountants, we're keeping you informed about crucial changes to HMRC's VAT penalty system. These new rules affect all Kent businesses submitting VAT returns from January 2023 onwards.

Key Changes to VAT Penalties

HMRC has introduced a new penalty system replacing the old VAT default surcharge. This affects all VAT-registered businesses, even those submitting nil or repayment returns. Understanding these changes is crucial for managing your business's cash flow effectively.

Understanding the New Penalty Structure

The new system introduces two types of penalties:

• First Late Payment Penalty:
  • 2% of outstanding amount at day 15
  • Additional 2% of outstanding amount at day 30
• Second Late Payment Penalty:
  • Begins from day 31
  • Charged at 4% per year on the outstanding balance
  • Calculated daily until full payment or arrangement made

Real-World Example for Local Businesses

Let's break down how this might affect a Gravesend business with a £15,000 VAT bill paid 51 days late:

• First penalty: £600 (£300 at day 15 + £300 at day 30)
• Second penalty: £34.50 (daily rate for 21 days)
• Total penalty: £634.50

How to Avoid Penalties

As your local accountancy partners in Gravesend, we recommend:

• Setting up automatic payment reminders
• Maintaining healthy cash flow management
• Contacting HMRC early if you anticipate payment issues
• Arranging Time to Pay agreements before penalties escalate

Support for Your Business

At MCC Partners, we understand the challenges Gravesend businesses face with VAT compliance. Our team can help you:

• Set up efficient VAT management systems
• Submit returns on time
• Negotiate with HMRC if needed
• Plan for VAT payments effectively

Need Help with VAT Management?

Don't let VAT penalties impact your business. Contact our Gravesend office at 01474 619 990 or email This email address is being protected from spambots. You need JavaScript enabled to view it. for expert support. Located at 1A Saddington Street, we're here to help local businesses stay compliant and penalty-free.