HMRC has replaced its default surcharge system with a points‑based penalty regime effective 1 January 2023. Late submissions accrue one penalty point each, with a £200 financial penalty triggered at filing‑frequency thresholds, while late payments incur percentage‑based penalties and interest at the Bank of England base rate plus 4%. Businesses must appeal within 30 days of a penalty notice and can reset points after a compliance period.
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Withers · about 4 hours ago
The Court of Appeal ruled that public funds paid to further education institutions are third‑party consideration for the supply of education, placing them within the scope of VAT but exempt. HMRC accepts the judgment, will not pursue a further appeal, and maintains the current position pending consultation, meaning institutions can continue their existing VAT treatment until any future policy change applies prospectively.
Guardian · 3 days ago
The UK government has announced a temporary reduction in VAT on children’s meals from 20% to 5% for the period 25 June to 1 September 2026, as part of the Great British summer savings scheme. Pubs and restaurants are already devising menus to take advantage of the discount, while industry leaders criticize the measure as a token gesture. The scheme also applies to cinema and theatre tickets and family attractions, with an estimated cost to the Treasury of £10.5 bn to £13 bn.
ICAEW · 4 days ago
The UK will apply a temporary 5% VAT rate to children’s meals and family‑friendly entertainment from 25 June to 1 September 2026. The guidance clarifies eligibility, exclusions such as sports events, and that businesses are not obliged to pass the cut on to consumers.
VatCalc · 7 days ago
The UK Court of Appeal on 12 June 2026 ruled that Bolt cannot use the Tour Operators Margin Scheme (TOMS) and must charge full 20% VAT on the entire fare. This reverses earlier tribunal decisions that had allowed Bolt to apply TOMS. The ruling has implications for other ride‑sharing operators such as Uber.
TaxPolicy · 8 days ago
A proposed permanent reduction of the UK hospitality VAT rate from 20% to 10% would cost an estimated £12‑14 bn per year, with the bulk of the benefit accruing to large chains such as McDonald’s. The analysis argues the cut is mis‑targeted, unlikely to lower prices, and would create incentives for businesses to re‑characterise activities to qualify for the lower rate. It suggests alternative measures—such as business‑rate reform or NIC relief—would better support the sector.
Business Wales · 9 days ago
The UK Government will temporarily reduce VAT on children’s meals and outings to 5% from 25 June 2026 to 1 September 2026, cutting the standard rate of 20%. The scheme covers children’s menu meals in restaurants, tickets for theatres, cinemas, soft play, adventure centres and theme parks. Businesses should review the GOV.UK guidance for eligibility and compliance.
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Key Takeaways
A financial penalty of £200 applies when a VAT‑registered business accumulates penalty points equal to its filing frequency threshold: 2 points for annual filers, 4 for quarterly, 5 for monthly.
For payments 31 days or more late, the first penalty is 3% of the VAT outstanding at day 15 plus an additional 3% of the amount still outstanding at day 30, followed by a daily rate of 10% per annum on the remaining balance.
Interest runs at the Bank of England base rate plus 4% on any unpaid VAT, and repayment interest at the base rate minus 1% (minimum 0.5%) on HMRC repayments.
Penalty points expire automatically 24 months after the return was due (or 25 months if the deadline was a month‑end) unless the business has reached the threshold and resets them.
A business has 30 days from the penalty notice to appeal, and must demonstrate a reasonable excuse such as serious illness, HMRC system failure, or mistaken belief that no return was due.
Primary source
Read the full article at VATITThis summary was published on VATfaqs.com on 20 June 2026. It relates to VAT developments in United Kingdom. The original source is VATIT.
