The changes will apply to VAT customers for accounting periods beginning on or after 1 January 2023
The new system allocates a point for each late return.
Points will last for 24 months and then expire – in the same way as points on your driving licence. There is also a ‘totting up’ process, and for late filing penalties reaching the maximum number of points results in a penalty being charged.
The late filing penalty is a fixed sum of £200.
Late payments are 2% of the VAT due after 15 days and then 2% if it is still outstanding after 30 days.
HMRC’s publication: Penalties for late submission