HMRC has introduced new penalty and interest rules for late returns and payments from 1 January 2023. Details here.

On 4 January 2023 HMRC published guidance on how to remove these points to avoid a penalty. This is particularly important if a business has reached the penalty point threshold.

The penalty thresholds are:

• annual returns – 2 points
• quarterly returns – 4 points
• monthly returns – 5 points

If a business is at the limit and has the maximum points allowed for its accounting periods, it can remove them by meeting two conditions which are:

• to complete a period of compliance, submitting all returns by the deadline
• to submit all outstanding returns for the previous 24 months

The guidance sets out how these tests are calculated and applied.