VAT Tribunals and VAT surcharge

VAT Tribunals and VAT surcharge

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A company has always paid it's VAT promptly.
Earlier this year, partly following a large bad debt, it had trouble paying it's VAT liability for two quarters.
The company contacted the VAT helpline, and via correspondence put in place a payment plan to repay the amounts over two to three months following the two return deadlines.
Subsequently additional funds have been raised and everything is now on a level footing.
I appreciate that it states clearly that surcharge is payable even though agreement is reached with the VAT authorities, but it's really annoying to be charged a surcharge, when everything reasonable was done to communicate the problems and resolve them.
HMR&C just say its for the integrity of the default surcharge system.
Is it a wasted exercise going to a tribunal in this scenario?
Out of interest is it an actual Act of Parliament that sets out the surcharge rules (i.e. have MPs actively agreed it) or is it some internal HMR&C regulation?
And whilst I'm on the subject did Parliament actually agree that a company can suffer a bad debt AND also be required to 'lend' HMR&C 17.5% of the bad debt for 6 months?! It seems ludicrous.
David Evans

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