Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: VAT: DMB manual processing: Default Surcharge Action Prints (DSAP)

Default surcharge action prints (DSAP) are generated where manual intervention is required to amend or cancel a surcharge. These are generated electronically via EF on transaction generated review prints (TGRP) or manually on a D1443 Delayed Update List.

Transaction Generated Review Prints (TGRP)

DMB Manual Processing work is allocated most of its work through the D1977 transaction generated review prints (TGRP) from the Electronic Folder (EF).

These prints are produced daily and electronically fed by the mainframe computer and indexed as DSAP. They identify where a surcharge needs amending or cancelling. There are several other types of TGRP prints, but they are for information purposes only.

Indexed Print Uses
     
DMU1 D1976 Information purposes only
DSAP D1977 Main work source
DMU2 D1978 Information purposes only
DMU3 D1979 Information purposes only
CREN D1980 Information purposes only

The errors identified on the D1977 prints are sorted into five main categories:

  • Nil Return
  • Claim Return
  • Unpaid Cheque
  • Tax Due
  • Change of legal entity/Transfer of Going Concern.

The period that needs amending is identified on the print by a $ symbol. Once the type of amendment has been identified, a VAT 720 should be completed and authorised at Officer level.

Action on D1977 for Nil Returns and Repayment Returns

There is no liability to surcharge if a nil or repayment return is submitted late. A default should be recorded and a Surcharge Liability Notice Extension (SLNE) issued, but there will be no increase in the rate of surcharge. When this occurs a D1977 print will be generated through EF. The caseworker needs to check the DS screen on VISION to establish that the surcharge history is correct and make any amendment necessary by completing a VAT 720. It should be noted that a customer would only enter the default surcharge system if they default on payment. Therefore no Surcharge Liability Notice (SLN) should be issued where a customer defaults on a late return only.

Action on the D1977 for Unpaid or Invalid Cheques

The D1977 unpaid or invalid cheques period specific print is produced when a customer has rendered his return with a payment and the cheque has gone unpaid, a VAT 176 unpaid cheque advice is on file and the following circumstances apply:

  • the cheque is for more than £100.00
  • it is related to one of the last 3 periods under enforcement
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

There are two types of returned cheque, which can be identified by either a code 1 or 2 viewing the LR screen on VISION.

  • Code 1 - This is where the customer has not got enough funds in his bank account and if the trader does not produce another cheque/cash in time, normal surcharges will apply.
  • Code 2 - There are several reasons why this cheque may have gone unpaid and the reason needs to be identified to establish whether a surcharge is applicable.
Reason Surcharge
   
Words and figures differ No
Post-dated cheque Yes
Not drawn in accordance with mandate two signatures may be required Yes
The customer may now be deceased No
Not made out to the correct company No
Cheque not signed Yes

Once it is established that a surcharge should be issued the caseworker should complete a VAT 720 to raise the appropriate surcharge.

Action on the D1977 for Tax Due Returns

There is no liability to surcharge if the tax due is paid on time but the return is submitted late. In these cases a default will be recorded and an SLNE issued, but there will be no increase in the rate of surcharge. When this occurs a D1977 print is generated through EF. The caseworker needs to check the DS screen on VISION to establish that the surcharge history is correct and make any amendment necessary by completing a VAT 720.

An SLN must have been issued to the taxable person before surcharge can be assessed. Defaults, SLNs and surcharge assessments cannot be transferred from one taxable person to another. Therefore the surcharge cycle must be restarted following the change of legal entity or transfer of going concern. When this occurs a D1977 print is generated through EF and any amendments can be made by completing a VAT720.

For example: a transfer of going concern takes place on 1st February 2006. The customer has previously incurred defaults in periods 10/05 and 01/06. A further default arises in 04/06. The record of default should read as follows:

Period Default attracts
   
10/05 SLN only
01/06 Liability to surcharge at 2%
04/06 SLN only

D1443 Prints - Delayed Update List

The Delayed Update List is generated when delays from Southend have been recorded onto VISION and they could have the incorrect surcharge and an adjustment may be required. The print will clearly state the reason why the form has been generated and that manual intervention may be required. Example of D1443 print below:

VATA3080 13853 REPORT D1443 DATE PRODUCED 21/10/03 PAGE 1
       

DELAYED UPDATE LIST: DEFAULT ACTION TAKEN

Local Office 032 SOUTH WEST

Returns / Remittances have been received which bear Dates of Receipt (This content has been withheld because of exemptions in the Freedom of Information Act 2000) for periods shown for which default action has been taken. Manual intervention may therefore be required.

Registration No Period Reference Document Type Date of Receipt
       
402 1019 27 00/00 VAT 111 01.09.03

End of Report for Local Office 032

There are a number of document types that could be referred to on the form that would be dealt with by the DMB Manual Processing caseworker.

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • VAT 177 - Transfer -a payment has been made incorrectly to the wrong account for example and a surcharge has been raised incorrectly and will need amending or removing
  • VAT 111 - Bank Giro -an electronic payment has been made and is within the 7-day deadline but a surcharge has been generated automatically. This will need amending or removing.
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)