Warning: Proposed repeal of default surcharge

From a date to be appointed, the default surcharge is due to be replaced.

The revised system will separately penalise (1) late payment of VAT and (2) late filing of VAT returns.

It will try to encourage prompt filing and payment by imposing an escalating series of penalties, depending on the number of failures within a penalty period. Further penalties arise if there is a prolonged delay in filing returns or paying the VAT due.

A late payment penalty may not arise if the taxpayer has agreed a ‘time to pay’ arrangement with HMRC under FA 2009, s. 108.

The revised penalties are:

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