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How do you account for VAT surcharges?

How do you account for VAT surcharges?

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Quick one: A company is issued a VAT surcharge. The company then accounts for this as an expense in the PNL and as a liability in the BAL on the date the surcharge was issued. Then, for tax purposes, the surcharge is added back to the profit as it is not tax deductible.

Correct?

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By Euan MacLennan
05th Apr 2012 13:26

Correct

... except that if the surcharge is not levied until after the year-end for a late return/payment before the year-end, the surcharge should be accrued into the year.

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By mrboroaccountant
05th Apr 2012 13:43

Gotcha

Thanks Euan - sincerely appreciated.

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By TTID
26th Jul 2012 18:25

For the sake of clarity....

Hi Euan,

Just come across this post and your answer.

You refer to accruing for the surcharge at the year end if a late return / payment before the year end,

However, if the return is for the quarter ending the same day as the accounts year end then return will be submitted by 1 month after the year end and due for payment approx 10 days after that.

Would you still accrue for this ?

Thanks in advance.

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