An Introduction to HMRC’s New Late Points System

A Look At the New HMRC’s Late Points System Policy

Income Tax returns. These new changes have been brought on in an effort to combat late submissions in a fair and consistent manner. This means that the new system will be fairer on those who occasionally miss a deadline, but cracks down on regular culprits of late submissions and payments. Currently, the penalties are set up in a way that issues a single default surcharge automatically upon late submission of payment. The penalty comprises a percentage of the VAT due on the return.

These fines can prove to be substantial, regardless of the fact that they don’t attract interest or increase in time. However, the new system will align the VAT penalties with the existing penalty set up in relation to direct tax returns.

Who Will Be Affected?

Initially, the changes will affect VAT registered businesses, as well as those who submit Income Tax Self Assessment. The late payments section of the new system will be structured in the following manner:

  • No late penalty for late payment made within 2 weeks following the deadline
  • Between 16 - 30 days after the deadline, 2% of due amount penalty is applied
  • After 30 days, 4% of due amount penalty is applied
  • From day 31, a second penalty of 4% id incurred, calculated on a daily basis of total money owing

Taxpayers who are struggling to pay their due amounts are urged to approach HMRC in order to agree to a Time to Pay Arrangement. The actual points system comes into play with the late submissions section of the new system. This will entail a separate points threshold based on each submission obligation. This will also be dependent on the frequency of the tax returns.

The Late Submission Point System

HMRC of the points allocated to them. Once the penalty threshold is reached, a set penalty of £200 is charged. These thresholds, as mentioned, are based on the frequency of the tax return. They are allowed in the following manner:

  • Annual tax returns have a point threshold of 2 points
  • Quarterly tax returns have a point threshold of 4 points (this includes ITSA and MTD)
  • Monthly tax returns have a point threshold of 5 points



Once you have reached the point threshold, a penalty will be charged for that failure and every subsequent failure to submit on time. However, your points total will not increase.

Additionally, generally speaking if you fail to submit on time more than once in a month relating to the same submission, then only one point is added. There are exceptions to this, however, and can be viewed on the Government page here.

When Can We Expect These Changes?

For VAT customers, the new points system will come into play from April 2022. For those submitting ITRSA, the new points system will come into effect on 6 April 2023. This will also apply to those whose business or property income is more than £10,000 per annum. For all other ITSA submissions, the system at this stage will take effect only from 6 April 2024. All in all, the new point system can be seen in a positive light, as this could encourage smaller businesses to get organised to hit the deadlines. It also seems like a clearer system that will avoid confusion and will proportiantly affect repeat offenders.

Spartan Accounting Group can help your small business with your introduction to HMRC’s new late points system. Our SME accountants in London are happy to share our vast wealth of knowledge with our clients in the SME space. Let us take care of your tax and self-assessment VAT. Enquire now for more information about our fixed fee small business accounting services.

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