Surrey town records acknowledgement of merit (5)
I believe the answer is:
epsom
'surrey town' is the definition.
(I've seen this before)
'records acknowledgement of merit' is the wordplay.
'records' becomes 'eps' (EP is a type of record).
'acknowledgement of merit' becomes 'om'.
'eps'+'om'='EPSOM'
(Other definitions for epsom that I've seen before include "The Oaks and Derby are run here" , "& 5 Purgative medicine" , "Mopes around in English horse-racing venue" , "English town, of course?" , "Poems about the race-course" .)