VAT surcharges need to be accounted for as a cost in the profit & loss account (although any VAT surcharges you pay would be tax deductible when working out tax).

The journal entry required for any VAT surcharges incurred would be as follows:

Dr Penalties (P&L)
Cr VAT Control Account (Balance sheet)

The VAT control account in the balance sheet will then reconcile to the amount owed as per HMRC.

What is a VAT Surcharge

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