Value Added Tax Act 1994 section 22

Further default after service of notice

Section 22 sets out the escalating surcharges that apply when a person who has already been served with a special surcharge liability notice continues to default on their special scheme VAT payments during the surcharge period.

• A surcharge is triggered when a person defaults on special scheme VAT during the surcharge period specified in a special surcharge liability notice, and has unpaid VAT for that period.
• The surcharge is the greater of £30 or a percentage of the outstanding special scheme VAT, with the percentage escalating from 2% for the first default, to 5%, 10%, and 15% for subsequent defaults.
• Special scheme VAT is VAT payable to HMRC or the relevant member state's tax authorities under a special scheme in respect of qualifying supplies of goods treated as made in the United Kingdom.
• Outstanding special scheme VAT arises where some or all of the VAT due for a period remains unpaid by the deadline for submitting the special scheme return for that period.