MJL Contracts Ltd v Commissioners: VAT Default Surcharge

• The default surcharge regime applies when a taxable person is in default in respect of a prescribed accounting period.
• A person is in default if HMRC have not received a VAT return by the due date or if HMRC have received the return, but not the VAT shown on the return by the due date.
• If a taxable person is in default, HMRC serve a SLN on the taxable person specifying the surcharge period.
• The default surcharge becomes payable if the taxable person defaults again within the surcharge period and has outstanding VAT for that prescribed accounting period.
• The amount of the surcharge is the greater of the specified percentage of the outstanding VAT and £30.
• A default surcharge is not limited to cases where the taxpayer neither submits a return nor pays VAT following an assessment under section 73(1) VATA.
• The term “assessment” in section 76(1) VATA refers to the process by which the amount of tax that a taxpayer has to pay is fixed.
• HMRC can make assessments on a generic basis and automate the process.
• Section 103 FA 2020 is not directly relevant to the issues in this appeal.
• The appeal is dismissed.

Source: bailii.org

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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