Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Interest definition

What does Interest mean? Interest is the additional sum payable for the time‑value of money: the amount a borrower pays a lender for using money, the return on debt‑type investments, and the sum awarded for being kept out of funds in litigation. Entitlement arises by: - Contract (contractual interest), including default interest, fixed or floating rates (for example, over base rate or SONIA), and simple or compound interest. Clauses must be clearly drafted and not operate as an unlawful penalty or unfair term. - Statute (statutory interest), for example late payment interest on commercial debts under the Late Payment of Commercial Debts (Interest) Act...

UK VAT Penalties: Civil (Default Surcharge Pre-2023 and FA 2021 Late Submission/Payment), Fraud, Inaccuracies, Mitigation, Reasonable Excuse and Criminal Offences

Published by a LexisNexis Tax expert

Practice notes

This Practice Note outlines when someone can become liable to a VAT-related penalty. A person charged with a VAT penalty may have a right of appeal; for guidance on appeal rules, see Practice Note: Appealing an HMRC decision.

Civil penalties

There are two broad types of civil penalties:

those arising from failure to meet basic compliance obligations, and
those stemming from more serious conduct or omissions

This Practice Note highlights the principal penalties in each group; for a comprehensive list, consult the further reading link to De Voil Indirect Tax Service [V5.332]. Civil penalties are issued by HMRC through assessment; for general information on assessments, see Practice Note: VAT assessments.

Penalties for basic compliance failures

Penalties apply where a taxpayer does not meet core VAT compliance duties, including:

breach of regulations made under VATA 1994. These regulations set out detailed collection and payment rules, so most administrative mistakes are covered. Failure to carry out specific obligations, such as keeping records, can also lead to a penalty, and
failing to submit returns or account for VAT on time...

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Web page updated on 22/05/2026

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