CPA Bulletin

www.cpa.uk.net CPA Bulletin > May 2023 45 Legal NEWS LEGAL: 1 On 1st January 2023, HMRevenue and Customs (HMRC) introduced a new penalty point scheme for those that submit a late VAT return - even if it is a ‘nil’ balance, or a late VAT payment. This new scheme replaced the VAT default surcharge and takes effect for accounting periods after that date. Changes have also been made on how interest is calculated. The changes to VAT penalties and interest payments are: Late Submission Penalties A business will receive one point for each late return and will receive a £200 penalty once they have reached their threshold. Each businesses’ threshold will be dependent on the frequency the business normally submits a return to HMRC - for monthly returns (5 points = 5 late returns), quarterly (4 points = 4 late returns), or annually (2 points = 2 late returns). Late Payment Penalties Should a VAT payment be more than 15 days overdue, then the business will incur a first late payment penalty at 2% of the ‘debt’ at day 15; however, should the payment be more than 30 days overdue, then a second 2% penalty arises - i.e., 4% total from day 31. HMRC has stated that they will not charge businesses a first late payment penalty, if businesses either pay in full, or, have an agreed payment plan in place [with HMRC] within 30 days of the payment’s due date. Payment Plans Where a business cannot genuinely pay their VAT bill in full, then the business may be able to set-up a business plan - subject to HMRC approval - to pay the money by instalments. Should a business propose a payment plan to HMRC - and this is agreed by them - within 15 days of a payment being due, then the business will not be charged a late payment penalty, provided that the business continues to honour the requirements of the payment plan. However, late payment penalties may apply where proposals are made after the first 15 days, but the agreement of the payment plan by HMRC can prevent any penalties from increasing. Interest Calculations HMRC has introduced both late payment and repayment interest, which replaces the previous VAT interest rules, and brings the new regime in line with the calculation method used in other taxes. Should you have any questions on this area, then you should contact your accountants. In January, the government published a draft Statutory Instrument (SI) regarding the Road Vehicles (Authorised Weight) (Amendment) Regulations 2023, which focuses on Zero Emission Vehicles (ZEVs) and Alternatively Fuelled Vehicles (AFVs). With all vehicles limited to a gross weight limit for that class of vehicle, ZEVs and AFVs are placed at a disadvantage - due to their heavier sources of power, e.g., batteries - when compared to a standard Internal Combustion Engine (ICE) fitted with a petrol/ diesel fuel tank. This disadvantage is then reflected with ZEVs/AFVs having a smaller cargo capacity to ensure that the vehicle’s gross weight and/or its axle weights are not exceeded. To compensate for the smaller cargo carrying capacity, the SI provides for a weight limit increase of a flat two tonnes for certain ZEVs and up to one tonne for certain AFVs; however, no additional weight allowance for ZEVs or AFVs will apply over the existing maximum of 44 tonnes, and the maximumweight limits for individual axles will remain unchanged. It is hoped by Government, that the introduction of this SI will galvanise interest by businesses to adopt ZEVs and AFVs into their fleet, which in turn will help improve the business’s decarbonisation status, as well as reduce its emission pollutants. At the time of writing, it is expected that this SI will be affirmed by parliament within the next few weeks. New VAT Penalties from HMRC The Road Vehicles ( Authorised Weight ) ( Amendment ) Regulations 2023