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HMRC internal manual

VAT Default Surcharge Officer's Guide

HM Revenue & Customs
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Calculating surcharge percentage

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Tax liable to surcharge (POA)

A taxpayer is in default if either of the two payments on account is received late or the return or balancing payment is late.

All late payments are added together at the end of the accounting period to establish the total value of the default for the whole accounting period. The surcharge rate is applied to this total value.

For example:

Amount due Amount paid by due date Amount paid late
(POA) £100,000 £50,000 £50,000
(POA) £100,000 £75,000 £25,000
(Balancing) £200,000 £150,000 £50,000

In this example the surcharge percentage will be applied to £125,000 at the end of the accounting period (that is, the total value of all the late payment defaults in the accounting period).

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

The table below shows the amount of surcharge a taxpayer may be charged at each rate:

Surcharge rate Surcharge amount Amount notified to the taxpayer
2% £400 £400
5% £399 N/A*
10% £16 £30
15% £31 £31
  • Although the taxpayer is liable to a surcharge, no surcharge assessment is charged because the surcharge amount when calculated is less than £400. However, a Surcharge Liability Extension Notice is issued and a further default within the extended surcharge period will be charged at the rate of 10%.


The decimals on surcharge calculations are not rounded up.

For example: A 10% surcharge on an amount of £2,345.67 should be calculated as £234.56, not £234.57.

Note: Where a taxpayer fails to file a return the surcharge will be charged on the amount shown as due on the centrally issued assessment. The surcharge will then be recalculated automatically when the return is filed.