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ACCA Strategic Professional · Advanced Taxation (UK) · Statutory obligations, time limits and the implications of non-compliance

Brindle Ltd paid VAT of £50,000 exactly 40 days late. Applying the ATX-UK rules (Finance Act 2025), which statement describes the penalty position?

The penalty is 6% of the unpaid VAT, £3,000, plus a daily penalty accruing at an annual rate of 10%. When VAT is more than 30 days late, both elements apply. The 3% rate covers only payments 16 to 30 days late, and later payment does not cancel the penalty.

  1. AA 3% penalty of £1,500 only, with no daily element
  2. BA 6% penalty of £3,000 plus a daily penalty at an annual rate of 10% on the unpaid VATCorrect
  3. CA 6% penalty of £3,000 only, with no daily element
  4. DNo penalty, because the VAT has now been paid in full

Explanation

Where VAT is more than 30 days late, the penalty is 6% of the tax (£3,000) plus a daily penalty at an annual rate of 10%. The 3% penalty applies only to 16 to 30 days late. Later payment does not remove the penalty.

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