VAT Surcharges

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VAT Surcharges (or VAT Default Surcharges) are penalties that could be levied by HMRC if your VAT return is submitted or paid late.

Your surcharge is a percentage of the VAT outstanding on the due date for the accounting period in default. The surcharge rate increases every time you default again in any given surcharge period.

This table shows how much you’ll be charged if you default within a surcharge period (but you don’t pay a surcharge for your first default):

Defaults within 12 monthsSurcharge if annual turnover is less than £150,000Surcharge if annual turnover is £150,000 or more
2ndNo surcharge2% (no surcharge if this is less than £400)
3rd2% (no surcharge if this is less than £400)5% (no surcharge if this is less than £400)
4th5% (no surcharge if this is less than £400)10% or £30 (whichever is more)

There’s no surcharge if you submit a late VAT Return and:

  • Pay your VAT in full by the due date
  • Have no tax to pay
  • Are due a VAT repayment

It’s possible to appeal against VAT Surcharges if you have a reasonable excuse for paying the VAT late, or if the VAT return has been submitted after the deadline.

Received a VAT Default Surcharge notice? We can help. Just email or call our team at One Accounting on 0131 220 0152 to chat about what to do next.