VAT Returns

HC Deb 10 December 1992 vol 215 cc769-70W

Mr. French

To ask the Chancellor of the Exchequer what formula is adopted when deciding the penalty for late payment of VAT returns.

Sir John Cope

Under the Finance Act 1985 liability to default surcharge arises where a taxpayer persistently fails to render a return or pay any VAT due on time. After two defaults have occurred within twelve months, a third default within 12 months of the second results in a liability to a surcharge of 5 per cent. of the unpaid tax. The level of surcharge increases for subsequent defaults, but cannot exceed 20 per cent. for defaults incurred after 1 April 1992. The maximum surcharge was previously 30 per cent.