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VAT: New penalty systems delayed to 2023

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Financial Secretary to the Treasury Lucy Frazer has announced that the new VAT penalties, which were to apply from 1 April 2022, will now be introduced from 1 January 2023.

13th Jan 2022
Tax Writer Taxwriter Ltd
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The mandation of Making Tax Digital (MTD) for VAT for all VAT traders (those not subject to exemptions) was to be accompanied by two completely new penalty regimes; for late VAT payment and for late filing of VAT returns.

These new types of penalty will now apply from 1 January 2023. It is not clear whether new regimes will commence for VAT periods beginning on or after 1 January 2023 or if they will apply to payments and VAT returns due on or after that date. HMRC has nearly a year to provide us with a definite answer.

Another delay

This is not the first postponement of the start of this new penalty regime - it was due to come into effect from 1 April 2020, after the end of the first ‘soft landing’ period of MTD filing for the bulk of VAT registered businesses. However, the start dates for both penalty regimes were pushed back to 1 April 2022, apparently to coincide with MTD mandation for all VAT registered traders.

This second delay to 1 January 2023 is not tied to the MTD timetable (as far as we know) as appears to be solely to allow more time for HMRC to build and test its IT system.

The Minister’s written statement said: “This extra time allows HMRC to ensure the IT changes necessary for the new penalties and interest charges can be introduced as effectively as possible, ensuring a high standard of service to customers.”

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Replies (9)

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By Hugo Fair
13th Jan 2022 18:43

Lucy Frazer has obviously taken the HMRC 'Newspeak' to her heart, but does she ever listen to what she says?

Leaving aside the twisted reasoning that deems taxpayers to be "customers" ... is there anyone else, even within HMRC, who believes that the "high standard of service" (for which we are still waiting) will be best demonstrated via the use of IT to introduce new automated penalties and interest charges?

Thanks (6)
Replying to Hugo Fair:
RLI
By lionofludesch
14th Jan 2022 17:22

Hugo Fair wrote:
..... who believes that the "high standard of service" (for which we are still waiting).....

You'll be waiting a long time for that. It doesn't correlate with the apparently more vital aim, in the Government's view, of reducing the workforce to substantially less than the irreducible minimum.

Thanks (0)
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By Paul Crowley
13th Jan 2022 20:59

Really do not have confidence in HMRC type IT
HMRC rarely explain the rules properly and all sorts of variations get left out
HMRC CT penalty system does not understand what happens with charges in accounts reference dates
Filing deadline moves for period one to the period two date. Comuter was never programmed to understand that issue

The usual HMRC version of submit an appeal often fails because the Humans also do not understand

Thanks (5)
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By johnjenkins
14th Jan 2022 09:41

Shouldn't HMRC just say. "Look we need a bit of time to get things right so everything will go on hold until 2025". At least then they will have got a bit of street cred back.

Thanks (5)
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By VATs-enough
14th Jan 2022 11:34

Not surprised this has been delayed given the backdrop of shambolic service levels at HMRC.

Whilst welcoming the departure away from Default Surcharge, not so happy about the demise of Repayment Supplement (which is being grossly overlooked in all this!)

Thanks (5)
Should Be Working ... not playing with the car
By should_be_working
14th Jan 2022 12:11

I'm only surprised that they haven't dressed this up as HMRC doing businesses a favour, which is the usual line when in fact they're just making life easier for themselves (self assessment penalty delays, MTD delays, savings allowance, etc, etc...)

Thanks (2)
Replying to should_be_working:
Tornado
By Tornado
14th Jan 2022 17:46

"I'm only surprised that they haven't dressed this up as HMRC doing businesses a favour"

They will know by now that no one will believe that rubbish any more, so at least they have avoided embarrassing themselves again.

Thanks (1)
Replying to Tornado:
RLI
By lionofludesch
14th Jan 2022 17:55

Tornado wrote:

"I'm only surprised that they haven't dressed this up as HMRC doing businesses a favour"

They will know by now that no one will believe that rubbish any more, so at least they have avoided embarrassing themselves again.

Avoided embarrassing themselves ?

I wouldn't go that far.

Thanks (0)
Tornado
By Tornado
14th Jan 2022 14:57

Not quite on topic but related to the huge gulf between aspirations and reality ... I was bemused by a message at the end of an email from the Land Registry that stated -

"HM Land Registry's ambition is to become the world's leading land registry for speed, simplicity and an open approach to data. Our Mission is: "Your land and property rights: guaranteed and protected".

This is after being told that a form sent to HM Land Registry on the 1st November 2021 for registration has an estimated date of 24th March 2022 until it will be dealt with.

This now seems typical of Government at all levels where words are not reflected in actions and quite frankly, it is difficult to believe anything we are told these days. It would help if Government was more truthful and pragmatic about situations and try and fix the current before embarking on new projects that obviously cannot succeed.

Who are they trying to kid?

There also seems to be massive breakdown of the professions with significant numbers of Solicitors, Accountants and others leaving the professions . A Chartered Surveyor told me a couple of days ago that he attended a meeting before Christmas with 16 other surveyors and 14 of them have decided to 'retire'.

I think we have had enough of fancy ideas like MTD and other unworkable projects that rely on high-tech software that never gets delivered, almost certainly the reason for the huge delays and no-show of ambitious ideas. The Government needs to get real and take a much more pragmatic approach to the situation we are in and call halt to the new and try harder to get the old working better. We cannot realistically rely on Vapourware, but should instead use and develop the tried and tested

We are having to deal with more and more unnecessarily complex rules and regulations every day and there is a limit to what we can all handle competently until we all end up doing nothing, as that is the safest route to take.

Thanks (7)