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

Orion Ltd paid VAT of £50,000 which was more than 30 days late. Which statement about the late payment penalty under the ATX-UK table is correct?

A 6% penalty plus a daily penalty at an annual rate of 10% applies. When VAT is more than 30 days late the table combines both elements, so a flat 6% alone or a 3% charge understates the penalty for such a late payment.

  1. AA flat 6% penalty applies, with no further daily charge
  2. BA penalty of 3% applies, increasing to 6% after 60 days
  3. CA 6% penalty applies, plus a daily penalty at an annual rate of 10%Correct
  4. DA daily penalty at an annual rate of 10% applies, with no 6% element

Explanation

For more than 30 days late the table gives 6% plus a daily penalty at an annual rate of 10%. The 6% alone ignores the daily element, and the 3% band only covers 16 to 30 days.

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