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Sense of proportion

06 January 2015 / Mike Thexton
Issue: 4483 / Categories: Comment & Analysis , VAT

Does the VAT default surcharge regime achieve its purpose?


  • Basic overview of the default surcharge regime.
  • Individual surcharge may be disproportionate but the default surcharge system is not fundamentally flawed.
  • In the Equoland judgment the CJEU discusses the concept of proportionality of penalties.
  • The default surcharge regime was designed to improve revenue flow.
  • Possible alternatives to the present system.

After I had served two years as an audit trainee an instructor on an in-house course told me I was supposed to put a specific objective at the top of every working paper – it was important to define the purpose of each procedure.

This was an epiphany: I gave up auditing shortly afterwards. It was too hard to think of any good reason for most of what I was asked to do.

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