The first monthly returns and payments affected by the penalties are due by 7 March 2023.

HMRC confirmed that ‘VAT customers will be subject to the new changes at different times depending on when they file their VAT returns and as such, we will be contacting them in chronological order’.

However, there will be a soft landing period so if a business misses a payment and resolves the outstanding debt within 30 days or sets up a repayment plan the penalty will be waived.

The late payment and points-based late submission penalties were introduced from 1 January 2023, replacing the VAT default surcharge, and apply to accounting periods which start on or after that date.