Hints for using the VAT API

By displaying appropriate prompts, MTD software could help customers to meet their VAT obligations on time. It could also support them to minimise their penalty position if they do fail to meet their obligation deadlines.

Late Submission Penalties

In January 2023, HMRC is introducing a new points-based system for late submissions. It is designed to be more lenient to those who make the occasional slip-up, whilst still penalising those who repeatedly avoid their obligations.

The following hints will help you to build appropriate prompts into your software to assist customers to submit their VAT returns on time, preventing them from getting a late submission penalty. For customers who have submitted VAT returns late, the prompts will encourage them to submit future VAT returns on time in order to avoid a financial penalty or reset their points total to zero.

Scenario	Prompt required	API endpoints to use
Prior to VAT return due date	Notify the customer when a VAT return is due, and inform them of their late submission penalty position if they fail to submit on time (i.e. the customer will receive a penalty point or a £200 fine).	Retrieve VAT obligations - to find out when the next VAT return is due. Retrieve VAT penalties - to see the current late submission penalty position, and hence whether the customer will receive a penalty point or a fine if they make a late submission.
Customer submits a VAT return late	Notify the customer that they have received a penalty point or they have received a £200 fine. Inform them of their points total.	Retrieve VAT penalties
Customer has penalty points	Inform the customer, prior to each VAT return submission due date, how submitting the VAT return on time will get them closer to resetting their penalty points to zero. Also, remind the customer to submit any outstanding VAT returns.	Retrieve VAT obligations - to: find out when the next VAT return is due. see any open VAT returns, and remind the customer to submit them. Retrieve VAT penalties - to see whether the individual or organisation currently has any penalty points. If they have, then let them know that they can get closer to resetting their penalty points if they submit the next VAT return on time (and also submit any previous returns that are still open).

Scenario

Prompt required

API endpoints to use

Prior to VAT return due date

Notify the customer when a VAT return is due, and inform them of their late submission penalty position if they fail to submit on time (i.e. the customer will receive a penalty point or a £200 fine).

Retrieve VAT obligations - to find out when the next VAT return is due.

Retrieve VAT penalties - to see the current late submission penalty position, and hence whether the customer will receive a penalty point or a fine if they make a late submission.

Customer submits a VAT return late

Notify the customer that they have received a penalty point or they have received a £200 fine. Inform them of their points total.

Retrieve VAT penalties

Customer has penalty points

Inform the customer, prior to each VAT return submission due date, how submitting the VAT return on time will get them closer to resetting their penalty points to zero.

Also, remind the customer to submit any outstanding VAT returns.

Retrieve VAT obligations - to:

find out when the next VAT return is due.
see any open VAT returns, and remind the customer to submit them.

Retrieve VAT penalties - to see whether the individual or organisation currently has any penalty points. If they have, then let them know that they can get closer to resetting their penalty points if they submit the next VAT return on time (and also submit any previous returns that are still open).

Late Payment Penalties

In January 2023, HMRC is introducing late payment penalties that will be charged at different rates based on when the payment is received. This will make the penalties more proportionate to the length of time that the payment is outstanding.

The following hints will help you to build appropriate prompts into your software to assist customers to submit their payments on time, and if they do not pay on time these will support customers in minimising their penalty position.

Scenario	Prompt required	API endpoints to use
Prior to payment due date	Remind the customer of the upcoming payment due date.	Retrieve VAT liabilities - to get payment due dates.
Customer does not pay on or before due date	Three days after the payment due date, notify the customer that they must pay (or agree to a payment plan) within 15 days of the due date, otherwise they will receive a late payment penalty. Inform the customer that late payment interest will be due from the date that the amount was outstanding, to the date that it is paid in full.	Retrieve VAT liabilities - to get any liabilities with payment due dates that fall between 3 and 15 days ago, which also have an outstanding amount against them (outstandingAmount).
Customer has not paid 15 days after due date	16 days after the payment due date, notify the customer that they have incurred a first late payment penalty at 2%. To stop that being increased to another 2%, they must pay (or agree to a payment plan) within 30 days of the due date.	Retrieve VAT penalties - to get: details of the new first late payment penalty that has been applied (penaltyAmountPosted) the amount of unpaid tax at day 16 (latePaymentPenalty1LowerRateCalculationAmount).
Customer has not paid 30 days after due date	Notify the customer that they have received a first late payment penalty at 2% of what was outstanding at day 15, plus 2% of what is still outstanding at day 30. Inform the customer that they will now be receiving a second late payment penalty, calculated daily at a rate of 4% per year for the duration of the outstanding balance. Until the customer pays, keep reminding them, at set intervals, of the outstanding debt and that the second penalty is still accruing.	Retrieve VAT penalties - to get: the amount of unpaid tax at day 16 (latePaymentPenalty1LowerRateCalculationAmount). the amount of unpaid tax at day 31 (latePaymentPenalty1HigherRateCalculationAmount). the resulting first late payment penalty that the customer will now be charged (penaltyAmountPosted). the penalty charge reference (penaltyChargeReference). the payment due date for the penalty charge (penaltyChargeDueDate). the number of days for which the second late payment penalty has accrued (latePaymentPenalty2Days), the amount that has accrued (penaltyAmountAccruing) and the amount that is yet to be paid (penaltyAmountOutstanding). Retrieve financial details - passing in: the charge reference of the first late payment penalty, to see further financial information relating to the first late payment penalty. For example, you can see the amount of accruing or posted interest on the penalty (documentInterestTotals). the charge reference of the second late payment penalty, to see further financial information relating to the second late payment penalty. For example, you can see the amount of accruing or posted interest on the penalty (documentInterestTotals). the charge reference of either the first or second late payment penalty, to see details of the late payment interest that is also accruing, on a daily basis, on the amount of unpaid VAT.

Period of familiarisation

To give customers time to get used to the Late Payment changes, HMRC won’t be charging a late payment penalty for the first year from 1 Jan 2023 until 31 December 2023 if the customer pays in full within 30 days of the payment due date.

The following hints will help you to build appropriate prompts into your software to assist customers pay on time and minimise their late penalty position throughout the period of familiarisation.

Scenario

Prompt required

API endpoints to use

Prior to payment due date

Remind the customer of the upcoming payment due date.

Retrieve VAT liabilities - to get payment due dates.

Customer does not pay on or before due date

Three days after the payment due date, notify the customer that they must pay (or agree to a payment plan) within 30 days of the due date, otherwise they will receive a late payment penalty.

Inform the customer that late payment interest will be due from the date that the amount was outstanding, to the date that it is paid in full.

Retrieve VAT liabilities - to get any liabilities with payment due dates that fall between 3 and 15 days ago, which also have an outstanding amount against them (outstandingAmount).

Customer has not paid 30 days after due date

Notify the customer that they have received a first late payment penalty at 2% of what was outstanding at day 15, plus 2% of what is still outstanding at day 30. Inform the customer that they will now be receiving a second late payment penalty, calculated daily at a rate of 4% per year for the duration of the outstanding balance.

Until the customer pays, keep reminding them, at set intervals, of the outstanding debt and that the second penalty is still accruing.

Retrieve VAT penalties - to get:

the amount of unpaid tax at day 16 (latePaymentPenalty1LowerRateCalculationAmount).
the amount of unpaid tax at day 31 (latePaymentPenalty1HigherRateCalculationAmount).
the resulting first late payment penalty that the customer will now be charged (penaltyAmountPosted).
the penalty charge reference (penaltyChargeReference).
the payment due date for the penalty charge (penaltyChargeDueDate).
the number of days for which the second late payment penalty has accrued (latePaymentPenalty2Days), the amount that has accrued (penaltyAmountAccruing) and the amount that is yet to be paid (penaltyAmountOutstanding).

Retrieve financial details - passing in:

the charge reference of the first late payment penalty, to see further financial information relating to the first late payment penalty. For example, you can see the amount of accruing or posted interest on the penalty (documentInterestTotals).
the charge reference of the second late payment penalty, to see further financial information relating to the second late payment penalty. For example, you can see the amount of accruing or posted interest on the penalty (documentInterestTotals).
the charge reference of either the first or second late payment penalty, to see details of the late payment interest that is also accruing, on a daily basis, on the amount of unpaid VAT.