ACCA Strategic Professional · Advanced Taxation (UK) · Legitimate tax planning measures
Dunmore Ltd paid a VAT liability of £30,000 exactly 20 days after the due date. Using the late payment penalty rules in the ATX-UK tax tables, what penalty applies?
The penalty is £900. A VAT payment that is 20 days late falls in the 16 to 30 day band, which carries a 3% penalty. 3% of £30,000 is £900. The 6% charge and daily penalty only apply beyond 30 days.
- ANil
- B£900Correct
- C£1,800
- D£1,800 plus a daily penalty
Explanation
Payment up to 15 days late attracts no penalty. Payment 16 to 30 days late attracts 3%, so £30,000 × 3% = £900. The 6% charge plus daily penalty only applies when payment is more than 30 days late, so £1,800 is wrong.
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