30 Aug 2017
A default surcharge is a penalty levied on businesses that submit late VAT returns. VAT registered businesses are required by law to submit their returns and make sure that payment of the VAT due has cleared to HMRC’s bank account by the due date.
There is no penalty for a first offence, however a business that submits a VAT return late is issued with a surcharge liability notice that begins on the date of the notice and ends twelve months from the end of the latest period in default.
If further VAT returns are submitted late during this period, a penalty based on a 'specified percentage' is charged. This increases with each default. The penalties start at 2%, increasing to 5%, 10% and then to a maximum of 15%. The 15% penalty can be charged more than once if the business continues to submit late VAT returns.
There are de-minimis levels below which no surcharge will be levied. It takes a full 12 months after the default period for the default surcharge clock to be 'reset'. The default surcharge penalty can result in what appears to be disproportionate penalties. However, the courts have mainly supported HMRC’s penalty regime - stressing that the rules are clear.
There are occasions when a business can appeal a default surcharge notice, but only if they had a reasonable excuse for submitting a late VAT return. The "reasonable excuse" criteria are limited, but we would happily provide an opinion on a possible appeal
and support your application if the circumstances warranted such an appeal.
For more information on this, any of our other services or for a free, no obligation consultationSend us a Message
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Vada Studios is a very successful music recording facility. The business had outgrown their existing premises, and had a vision to create one of the top residential recording studios in the UK.
A highly successful restaurant, butcher and retail business.
GJA have been the retained accountants for this property investment and development group for over 20 years. Imminently due to dissolve companies.
Proco approached us with an idea of becoming a distributor of a high-end product in the UK, supplying vinyl nationally.
In 2008 Tom Floate left his employer to set up his own business providing website services. Initially forming a partnership with his wife Rachel, they began trading IO Studios from their home office.
Barry the Butcher is a very successful wholesale butchery and retail business.
Grenfell has a broad range of experience and knowledge, working with clients from many different industry sectors. Grenfell is also the senior audit partner in the practice.
Chris works with a diverse profile of owner managed businesses to assist them to grow and retain wealth. Although Chris works with clients from a wide range of sectors, he has particular expertise in property, catering, consultancy and professional services.
Managing Director ACMA
Alex has worked for Grenfell James since 2002 and became a director in 2013. Overseeing our internal operations, he manages the flow of work and ensures we hit our strict deadlines. Alex also manages a portfolio of clients, with expertise in manufacturing and service businesses.
Operational Director MAAT
David has worked for Grenfell James since 2006. He heads up our tax team and is highly experienced with expertise in different industries and sectors.
Tax Director ACCA
Having started his training in industry, Mark qualified in 2006 and joined Grenfell James in 2010. He works as a client manager with a diverse portfolio of clients, with specialist knowledge of the medical profession. Mark is also an Audit manager in the practice.
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Hannah qualified in 2016, having worked for the company since 2009. She acts as a client manager for a range of businesses, with expert knowledge of the equestrian and rural sector. Hannah also manages our payroll team.
Client Manager ACCA
Mckechnies independent tea and coffee bar.
Mr J McCarthy
Paul Stanley. A S Contracts Ltd.
Mr I Cameron
NPD Design Consultants Ltd
Andrew Knight. The Howard Arms Ilmington
Regent Square Estates
Proco Coatings & Laminates
Roy Ferguson. The Perfect Cosmetics Company.
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