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HMRC internal manual

VAT Default Surcharge Officer's Guide

HM Revenue & Customs
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Exclusions from default surcharge

In law anyone who is registered for VAT is in default if they file and/or pay their return late. However, in practice the following taxpayers are automatically excluded from surcharge processing

  • taxpayers filing first period returns (except those transferred as ‘going concerns’ by the VAT 68 procedure)
  • taxpayers classified as ‘repayment’
  • taxpayers who have or are in the process of deregistering (such as, where the deregistration indicator is set against the taxpayer’s VAT mainframe account)
  • taxpayers who are insolvent
  • Local Authorities (section 20 bodies)
  • missing taxpayers (those with review code 309 set against their VAT mainframe account).