HMRC fines / penalties and Time to Pay arrangements

Updated as at 01 January 2023 with HMRCs new VAT penalty regime

Time to Pay arrangements

If you or your business are finding it difficult to make a tax payment you may be able to enter into a monthly payment option with HMRC, called a Time to Pay arrangement.

These arrangements are based on your individual / business financial position and circumstances, and capacity to pay.

It’s usually easier to get an agreement before the deadline rather than after you’ve missed it. You might still be able to get one after the deadline, so it’s always worth contacting HMRC.

For Self Assessment bills, you may be able to set up a payment plan online, if you owe less than £30,000 and have no other tax debts.

You’ll be charged interest for however long it takes you to pay off your income tax debt. This starts from the first day the payment is late. You can check the current income tax rate on GOV.UK.

VAT returns

The deadline for submitting your return online is usually one calendar month and 7 days after the end of an accounting period. This is also the deadline for paying HMRC

If you miss this deadline, you'll receive one (1) penalty point until you reach the penalty point threshold. When you reach the threshold, you’ll receive a £200 penalty. 

Quarterly lodgers have a 4 point penalty point threshold.  Annual 2 points.  Monthly 5 points.

If you're at the threshold by the time the next due date comes around, and you still haven't lodged your prior return/s, you'll receive another £200 penalty.

More information