Changes to VAT penalty regime delayed until 2023

The government has announced plans to delay the introduction of penalties for late submission of VAT returns.

The reforms come into effect:

  • for VAT taxpayers from periods starting on or after 1 January 2023
  • for taxpayers in Income Tax Self Assessment (ITSA), from the tax year beginning 6 April 2024 for taxpayers with business or property income over £10,000 per year (that is, taxpayers who are required to submit digital quarterly updates through Making Tax Digital for ITSA)
  • for all other ITSA taxpayers, from the tax year beginning 6 April 2025