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

Zephyr Ltd, a UK VAT-registered company, paid a VAT liability of £40,000 exactly 10 days after the due date. Using the late payment penalty rates in the ATX-UK tax tables, what default penalty applies to this late payment?

No penalty applies. Under the ATX-UK tables, VAT paid up to 15 days late carries no late payment penalty. The 3% charge begins only at 16 days late, and the 6% charge plus daily penalty applies beyond 30 days, so a payment 10 days late is outside both.

  1. ANo penalty, because the payment was up to 15 days lateCorrect
  2. B£1,200 (3% of the VAT paid late)
  3. C£2,400 (6% of the VAT paid late)
  4. D£2,400 plus a daily penalty at an annual rate of 10%

Explanation

The tables show that a payment up to 15 days late attracts no penalty. The 3% penalty only starts at 16 to 30 days late. The 6% plus daily penalty applies only when payment is more than 30 days late. Ten days falls in the first band.

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