VAT Surcharge Liability Notice

Spencer_Li

Hoping someone can help.

One of our clients had a Surcharge Liability notice for late payment of vat.


What in fact happened was that although the payment was made on time, the bank transferred the money in two stages; with £20,000 actually transferred the following day (after the deadline).


We appealed against this and have received a letter confirming that the SLN has now been removed.


I was wondering whether the charge at 2% would be refunded back to the client as well. The letter does not seem to indicate this and the account balance is currently at 0.


Thanks.

antonic

Before a Financial Penalty is imposed for a Default Surcharge you have to have defaulted 4 times in a 12 month period.

The Surcharge system works like this :

1st Surcharge - no financial penalty Help Letter Issued
2nd Surcharge - no financial penalty Surcharge Liability Notice issued (2% of value of return)
3rd Surcharge - MAY get a financial penalty AND Surcharge Liability Notice Extension Notice issued (5% possible penalty)
4th Surcharge - Default Surcharge of 10% of the value of the return (can be 10% of the WHOLE value if no payment made by due date OR if a partial payment made its 10% of the outstanding balance)
5th Surcharge - 15 % (same as for 4th Surcharge).

See attached link for more info
http://www.hmrc.gov.uk/vat/managing/problems/penalties.htm

Unless your client has had a financial penalty there is nothing to refund BUT your client is still in the Default Surcharge scheme and if they pay the next 4 returns in full on the due date, they will exit the scheme.

Hope this helps.

Spencer_Li

Thanks for your reply antonic.

Maybe my wording wasn't quite correct with my terms. Basically this was the second time that payment has been late in a 12 month period, so my client was asked to pay 2% of the £20,000 which arrived at HMRC a day late = £400

The client paid this.

We appealed against this saying that it was the bank's fault. HMRC agreed to cancel the SLN, saying that the date had now moved back to March 2012 when the first late payment occurred.

No refund of the £400 has occurred and I was wondering if there should be.

antonic

Did they have an existing debt before & after the DS was cancelled ? - if they did HMRC would allocate the payment for the cancelled DS against any pre -existing debts.

Just because it was cancelled doesnt mean they would get a refund in such a circumstance.

Spencer_Li

antonic wrote: »

Did they have an existing debt before & after the DS was cancelled ? - if they did HMRC would allocate the payment for the cancelled DS against any pre -existing debts.

Just because it was cancelled doesnt mean they would get a refund in such a circumstance.

Thanks for your help antonic.

I thought that might be the case. I think we'll be able to get the money back from the bank as they transferred the vat amount over two days.

Thanks again.