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UK VAT late payment penalties depend on days overdue and VAT return due dates. Day 1 is the first day after the due date. Penalties vary for periods before and after 1 April 2025.
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First penalty applies from Day 16 to 30. For post-31 May 2025 periods, it is 3% on day 15 unpaid amount, plus an additional 3% on day 30 if no Time to Pay (TTP) proposal is made.
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Second penalty applies from Day 31 onwards. For post-31 May 2025 periods, a 10% annual rate accrues daily on outstanding VAT until full payment or approved TTP. Pre-April 2025 periods incur 4% annual rate.
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HMRC may issue assessments for unpaid VAT seven days before the two-year time limit. TTP proposals must be agreed and upheld to avoid further penalties, with daily accruals calculated on the final day’s balance.
Source: www.fiscal-requirements.com
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