Update from HMRC re VAT penalty notice letters to agents
By Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes)
29 March 2023
Chris Campbell explains some issues regarding VAT penalty notice letters being sent by HMRC to agents.
The new VAT penalty regime now takes effect
As previously widely publicised, a new VAT penalty regime replaced the default surcharge regime for VAT return periods commencing on or after 1 January 2023.
The new points-based regime charges penalties for the late submission of VAT returns. The charges will incur once the penalty thresholds have been reached as follows:
Annual VAT returns 2 points
Quarterly VAT returns 4 points
Monthly VAT returns 5 points
A £200 penalty now applies once a VAT registered business has reached the relevant number of points above, with a further £200 penalty per late return thereafter. Late VAT payments also attract both interest and penalties.
Following the changes, the first monthly returns and payments affected by the penalties were due by 7 March 2023. As a result, VAT registered businesses who have submitted their return late will now have accrued penalty points and there will also be interest and penalty implications if those businesses have paid their VAT late.
We have had an ongoing dialogue with HMRC on the new penalty regime via our usual forums. Through this, we have become aware of an issue regarding the letters being sent to agents where their client has incurred a penalty, which is summarised below.
Important update from HMRC on VAT penalty point notices for agents and their clients
HMRC is starting to issue VAT penalty notices to customers who file or pay their VAT late. If you have been authorised by your client to act on their behalf, you will receive exact copies of any notices that are issued to your clients.
Due to recent GDPR concerns raised by the agent community, HMRC has removed customer details (names and addresses) from the copies of letters sent to authorised agents. This is to avoid the risk of customer’s details being visible through the envelope window.
What can agents do if they have any queries about letters they receive?
If you receive one of these notices you can check which client the notice refers to by checking the VAT registration number (VRN) on the notice. Using the VRN, you can also view your client’s position by accessing the Agent Services Account. [Sign in to your agent services account - GOV.UK (www.gov.uk)]
HMRC is working on a solution to resolve this issue and avoid any confusion in future communications to agents.
Let us know your views
We welcome members’ input to inform our work on consultations or other tax-related matters – email tax@icas.com to share your insights and feedback. ICAS responds to many tax calls for evidence and consultations, as well as producing tax policy papers and reports. We also regularly attend meetings with HMRC at which service levels, delays and other issues are discussed, and we raise problems being encountered by members.
