VAT period

[Acid]

Hi

Need your help about how does surcharge arise on VAT.

What is a VAT Period and how does the surcharge arise on the default VAT payments?

Thank you very much

Acid

[Vandana]

Hi Acid,

Basically a VAT surcharge is charged by HMRC when either
a) a VAT return is not submitted on time.
b) a VAT payment is not submitted on time.

If it is the first time a person does not submit/pay on time, HMRC will overlook it but send a warning. This is called a liability surcharge notice. If they do not pay/submit again in a 12 month period, they will be liable to pay a surcharge.

It is well explained on the HMRC website:
The surcharge is calculated as a percentage of the VAT that is unpaid at the due date. If no return is submitted the amount of VAT due will be assessed and the surcharge based on that amount. The rate is set at 2 per cent for the first default following the Surcharge Liability Notice, and rises to 5 per cent, 10 per cent and 15 per cent for subsequent defaults within the surcharge period.

Hope this answers your question - let me know if not,

Vandana