CH192230 - Effect of moving between groups of returns: overview
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”
Where the frequency of a taxable person’s VAT submission obligation changes from one group of returns (the “old” group of returns), into a different group of returns (the “new” group of returns), their penalty points total is adjusted. This aims to prevent a taxable person from being advantaged or disadvantaged by having penalty points that were awarded, with a particular penalty point maximum then being measured against a different penalty point maximum.
The change in group could occur where a taxable person stops being required to submit quarterly returns and instead becomes required to submit monthly returns, or vice-versa. An example can be where HMRC determines that a taxable person must submit monthly returns to protect the revenue.
The adjustment is only required where the returns relate to the same business or businesses.