Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · Value added tax

Corvid Ltd paid £80,000 of VAT 40 days after the due date. Using the ATX-UK table, the daily penalty accrues at 10% a year on the VAT outstanding from day 31. Assume a 365-day year and that the daily penalty runs for 10 days (days 31 to 40). What is the total penalty, to the nearest £?

The total penalty is £5,019. VAT paid more than 30 days late attracts 6%, which is £4,800 on £80,000, plus a daily penalty at 10% a year for 10 days, which is about £219. Adding them gives £5,019.

  1. A£4,800
  2. B£5,019Correct
  3. C£4,985
  4. D£5,119

Explanation

For payment over 30 days late the penalty is 6% plus a daily penalty at 10% a year. 6% x £80,000 = £4,800. Daily element: £80,000 x 10% x 10/365 = £219.18, giving £5,019. £4,800 omits the daily penalty.

Did you get it right without looking?

One question tells you little. A timed set on Value added tax shows your real accuracy, how long you take and where you lose marks.

Practise Value added taxFree diagnostic mock

More Value added tax questions