More than half a million businesses filed a late VAT return in 2020, a major study has revealed.
The research, published by HM Revenue & Customs (HMRC), suggests that thousands of businesses could face fines and interest in the wake of the coronavirus pandemic.
According to the figures, some 519,120 VAT returns were recorded as “late” by the tax authority in the 12 months to December 2020 – up 13 per cent compared to the previous year.
The report comes as HMRC promises a “light touch” approach to compliance-related fines and interest during the coronavirus pandemic, but a blanket exemption is unlikely.
While the tax authority will determine what will qualify as a “reasonable excuse” in the near future, businesses concerned about financial penalties should get in touch with an HMRC representative as soon as possible.
What are the penalties for non-compliance?
A business may have to pay a fine and interest if HMRC does not receive its VAT return by the submission deadline and full payment for the VAT due on the return by the payment deadline.
The fine, known as a surcharge, starts at two per cent of VAT due after the second default in any 12-month period, but can rise to 15 per cent after the sixth late return.
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