ICAEW.com works better with JavaScript enabled.


New VAT penalty regime deferred to January 2023


Published: 14 Jan 2022 Update History

The VAT default surcharge was due to be replaced by new late submission and payment penalties and interest charges from April 2022. The introduction of the new regime has been deferred to January 2023 to allow HMRC more time to make the necessary systems changes.

In a written ministerial statement, the Financial Secretary to the Treasury has announced that changes to the interest and penalty rules for VAT will be introduced from January 2023 rather than April 2022.

The changes will replace default surcharge with:

ICAEW’s Tax Faculty is developing a webinar and other support material for members. These will now be made available in the Autumn.

ICAEW understands that the policy remains unchanged and that the delay is to allow sufficient time for necessary changes to be made to HMRC’s systems.

The deferral brings with it the considerable benefit that the changes are now decoupled from the extension of Making Tax Digital (MTD) for VAT from April 2022.

The penalty rules will also extend to income tax self assessment (ITSA) in the future. The start date is still expected to be the 2024/25 tax year for those mandated for MTD ITSA from that date and from 2025/26 for all other ITSA taxpayers.

No legislation is required to change the start date as the appointed day orders for penalty reform have not been laid.

Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty

More from the Tax Faculty

Latest news
Making tax digital image

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter

Practical guidance

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.