Default within the surcharge period
If a taxpayer defaults (files a return or pays late) within the surcharge period, the surcharge period is extended.
For example: Mr Smith files his return for 03/16 late. A Surcharge Liability Extension Notice is issued to Mr Smith. The notice tells Mr Smith that his surcharge period has been extended until 31 March 2016.
If a taxpayer pays a return late during a surcharge period they may be charged an extra amount known as a surcharge. The surcharge is calculated as a percentage of the VAT paid late. The rates of surcharge are:
- 2% of the amount of VAT paid late for the first late payment
- 5% of the amount of VAT paid late for the second late payment
- 10% of the amount of VAT paid late for the third late payment
- 15% of the amount of VAT paid late for the fourth and subsequent late payments.
Note: A surcharge is not charged at the 2% and 5% rates if it is for less than £400. There is a minimum surcharge of £30 charged at the 10% and 15% rates.