Chapter 17 - Default Surcharge

Question 1

Introduction

Answer 1

Default occurs when either a VAT return is submitted late or a payment is made late.
First default, a warning is issued. There is then a 12 month Surcharge Period. A default during the period incurs a surcharge and it will extend the 12 months from the end of the quater of default

Question 2

The Surcharge

Answer 2

Amount of surcharge is a % of unpaid VAT and depends on what number default it is
1 = 2%
2 = 5%
3 = 10%
4+ = 15%
HMRC will not collect a surcharge of less than £400 unless the 10 or 15% rate applies. For 10 and 15% rates, there is a min charge of £30

Question 3

Surcharge Not Applying

Answer 3

Doesn’t apply if a nil or repayment VAT return has been submitted late. However, it will still extend the 12 month period

Question 4

Electronic Filing Extension

Answer 4

Electronic monthly filers receive a 7 calendar day extension to the normal filing date