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

Marcus paid VAT 40 days late on a liability of £20,000. Using the ATX-UK tax tables (Finance Act 2025), which statement about the penalty on that late payment is correct?

A 6% penalty of £1,200 applies, plus a daily penalty at an annual rate of 10%. The tax tables apply this top band to VAT paid more than 30 days late, and Marcus was 40 days late. The 3% band does not apply.

  1. AA single penalty of 3% of £20,000, being £600, applies
  2. BA penalty of 6% of £20,000, being £1,200, applies plus a daily penalty at an annual rate of 10%Correct
  3. CNo penalty applies because the first default in a period is only a warning
  4. DOnly the daily penalty at an annual rate of 10% applies, with no percentage charge

Explanation

Payment more than 30 days late falls into the top band: 6% of the VAT outstanding plus a daily penalty at an annual rate of 10%. 6% of £20,000 is £1,200. The 3% charge applies only to payments 16 to 30 days late and is not the charge here.

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