Skip to content

ACCA Applied Skills · Taxation (UK) · The computation of VAT liabilities

Marlow Ltd did not pay its VAT liability for a quarter until 20 days after the due date. The VAT due was £30,000. Under the penalty rules for late VAT payments given in the tax tables, what is the penalty (excluding any interest)?

The penalty is £900. A payment 20 days late falls into the 16 to 30 days band, which carries a 3% penalty. Three percent of the £30,000 due is £900, and no daily penalty applies because it is not more than 30 days late.

  1. A£0
  2. B£900Correct
  3. C£1,800
  4. D£900 plus a daily penalty

Explanation

Payment 20 days late falls within the 16 to 30 days band, where the penalty is 3%. 3% x £30,000 = £900. £0 applies only up to 15 days late. £1,800 uses the 6% rate, which applies only when more than 30 days late, and the daily penalty also applies only in that case.

Did you get it right without looking?

One question tells you little. A timed set on The computation of VAT liabilities shows your real accuracy, how long you take and where you lose marks.

Practise The computation of VAT liabilitiesFree diagnostic mock

More The computation of VAT liabilities questions