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HMRC internal manual

VAT Civil Penalties

HM Revenue & Customs
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Default Surcharge: Reviews and appeals: Traders under the control of the Law of Property Act Receiver

In cases where a Law Of Property (LPA) Receiver is involved the trader is not technically insolvent. The LPA Receiver controls and manages assets specified under a fixed charge.

Any output tax they collect must be accounted for (either on the trader’s VAT return or separately on a VAT 833). Returns and payments due remain the responsibility of the trader, and where applicable are subject to the default surcharge system.

When carrying out a review of a surcharge decision, you should look at what steps the trader has taken to be compliant. For example if the LPA receiver is delaying payment, has the return and (partial) payment been made on time.

You may be given evidence that confirms the LPA Receiver is in full control of the assets and goodwill of a business. In these cases it is appropriate to inhibit surcharge processing.

You must consider the individual circumstances of each case and it must be regularly reviewed.