Budget: VAT
3rd March 2021
The reduced rate of 5% VAT which was brought in to support the hospitality sector will remain in place until the end of September 2021.
It will then increase to 12.5% until 31 March 2022, before returning to the standard-rate of 20%.
The VAT registration threshold remains frozen at £85,000 of taxable turnover until April 2024.
As previously announced, Making Tax Digital will be extended to all VAT registered business from 1 April 2022.
A new points-based penalty for the late submission of VAT returns will be introduced. Businesses will incur a £200 penalty for each late submission after a points threshold has been reached.
A percentage based penalty will be introduced for late payments of VAT: no penalty due on tax paid within 15 days of when it was supposed to be paid; a penalty of 2% if it is paid within 30 days of when it was supposed to be paid; 4% on tax paid more than 30 days late, followed by a further 4% penalty calculated on a daily basis from day 31 onwards.
VAT interest provisions will be aligned with income tax with late payment interest also payable on amounts not paid by the due date until the tax has been paid.
Please contact Phil Salmon, another member of the VAT team, or your usual haysmacintyre contact for further details and assistance in relation to the above.
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