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

Mercia Ltd paid its VAT liability of £40,000 exactly 10 days after the due date. Under the late payment penalty rules in the ATX-UK tax tables, what default penalty applies to this late payment?

No late payment penalty applies. Under the VAT late payment rules, a payment made up to 15 days after the due date attracts no penalty. Penalties of 3% start only when payment is 16 to 30 days late, so a 10-day delay is penalty-free.

  1. ANo penalty, because the payment was no more than 15 days lateCorrect
  2. B3% of the VAT paid late, which is £1,200
  3. C6% of the VAT paid late, which is £2,400
  4. D£2,400 plus a daily penalty at an annual rate of 10%

Explanation

The tables show no penalty for VAT paid up to 15 days late. The payment was 10 days late, so no penalty arises. The 3% charge applies only where payment is 16 to 30 days late.

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