Value Added Tax Act 1994 section 23

Default surcharge: exceptions for reasonable excuse etc.

Section 23 of Schedule 9ZE sets out the circumstances in which a person can avoid a default surcharge under the special scheme by demonstrating a reasonable excuse or that their return or payment was despatched in good time.

• A surcharge can be avoided if the return or VAT payment was sent in time and in a manner where it was reasonable to expect it would arrive within the deadline, or if there is a reasonable excuse for the failure.
• Where this defence succeeds, the person is treated as not having been in default for the relevant tax period, and any surcharge liability notice that depended on that default is treated as never having been served.
• A default is only "material" to a surcharge if it is the default that directly triggered the surcharge, or if it was relied upon when issuing the surcharge liability notice and no previous surcharge has been charged within the surcharge period.
• A default is disregarded entirely if it has already resulted in a penalty for a breach of regulatory provisions, or if the Commissioners (after consulting the Treasury) direct that it should be ignored.