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ACCA Strategic Professional · Advanced Taxation (UK) · Value added tax

Orion Ltd registered for VAT late and its VAT return payment for a quarter of £20,000 was paid 25 days after the due date. Which statement correctly describes the late payment penalty under the ATX-UK table for this payment?

A payment 25 days late falls in the 16 to 30 days band, so a 3% penalty applies. On £20,000 this is £600. No penalty applies only for payments up to 15 days late, and the 6% band plus daily penalty applies beyond 30 days.

  1. ANo penalty applies because the payment was up to 15 days late
  2. BA 3% penalty of £600 applies because the payment was 16 to 30 days lateCorrect
  3. CA 6% penalty of £1,200 applies because the payment was late
  4. DA 3% penalty applies only if the payment is more than 30 days late

Explanation

The table gives no penalty up to 15 days, 3% for 16 to 30 days, and 6% plus a daily penalty beyond 30 days. At 25 days late the 3% band applies, giving £20,000 x 3% = £600. The 6% band needs more than 30 days.

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