The new legislation has been implemented as Late Payment Penalties that will be applied to payments due from VAT businesses and ITSA taxpayers. The current late payment penalties in Schedule 56 of FA 09 will be replaced by a new regime for ITSA taxpayers whereas, the Surcharge will be replaced that have been used for both a combined late submission and late payment sanction.
First Penalty
There won’t be any penalties for the taxpayers if the outstanding tax will be paid within 15 days after the due date. They will incur the first penalty if the tax remains unpaid after Day 15. 2 % will be charged on the outstanding tax after 15 days as a penalty. However, if the tax is still unpaid after Day 30, then the penalty will be calculated as 4% on day 30 which will be 2% of the tax outstanding after Day 15 as well as 2% of the tax outstanding at Day 30.
Additional or Second Penalty
If the tax remains unpaid on Day 31 then the penalty will be charged on a daily basis to the taxpayer as an additional penalty. It will accrue at a rate of 4% per annum on the outstanding amount whereas this will stop once when the taxpayer pays the tax due.
For more information, click https://www.gov.uk/government/publications/penalties-for-late-payment-and-interest-harmonisation/penalties-for-late-payment-and-interest-harmonisation