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

Zeta Ltd, a UK VAT-registered company, paid its VAT liability for a quarter 20 days after the due date. Using the late payment penalty rates in the ATX-UK tax tables (Finance Act 2025), what is the position regarding a default penalty for that payment?

A penalty of 3% of the outstanding VAT applies. The ATX-UK tables give no penalty up to 15 days late, 3% for 16 to 30 days late, and 6% plus a daily charge beyond 30 days. Payment 20 days late falls into the 3% band.

  1. ANo penalty arises because the payment was less than 31 days late
  2. BA penalty of 3% of the VAT outstanding applies because payment was 16 to 30 days lateCorrect
  3. CA penalty of 6% of the VAT outstanding plus a daily penalty applies
  4. DNo penalty arises because penalties only apply once payment is more than 60 days late

Explanation

The tax tables show no penalty for up to 15 days late, 3% for 16 to 30 days late, and 6% plus a daily penalty at 10% annual rate for more than 30 days. Payment 20 days late falls in the 16 to 30 day band, so 3% applies. The 6% plus daily charge applies only beyond 30 days.

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