CH192180 - Penalty reform - penalties for failing to file VAT returns by the due date for periods from 1 January 2023: award of penalty points: time limits for awarding penalty points
NB: “These rules currently only apply to VAT for VAT periods starting on or after 1 January 2023. These rules will come into force for other tax regimes at a future date. You must check the date from which these rules apply for the tax or duty you are dealing with”
HMRC cannot award a penalty point after the expiry of the time limit set out in Sch24, Para 6(3) to (6).
The time limit applies to when HMRC awards the penalty point, not when it is notified. The legislation does not prescribe a time limit for notification of a penalty point or financial penalty.
The time limits that apply are the later of:
| VAT return submission frequency | Time limit for penalty assessment |
|---|---|
| Annual and Non-standard Tax Periods (NSTP) over 20 weeks | 48 weeks |
| Quarterly and NSTP over 8 and up to and including 20 weeks | 11 weeks |
| Monthly and NSTP up to and including 8 weeks | 2 weeks |
The time limit starts from the day after the submission due date for the return. If there are multiple late returns which contribute to a single penalty point, the start date is determined by the later failure date.
S6(6) provides for an alternative time limit that may apply where no return has been filed. However, this is not applicable to VAT.
The alternative time limit is either:
a) where an assessment of the liability to tax is issued in the absence of the return – no later than the last day of the period of 12 months after the end of the appeal period for the assessment, or
b) where there is no such assessment - the last day of the period of 12 months from the date on which the liability was ascertained, or it is ascertained that the liability is nil.
This does not apply to VAT because the assessment in the absence of a return (a central assessment) is not appealable, and so has no appeal period. an end date given by a) is therefore unable to arise. It is not anticipated that b) would arise in VAT because central assessments are not appealable.
See CH192370 for when the above time limits do not apply as a result of a Tribunal decision.
FA2021 SCH24 para 6(3) to (6)