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ACCA Strategic Professional · Advanced Taxation (UK) · Alternative ways of achieving personal or business outcomes and their tax consequences

Zeta Ltd has an overdue VAT payment. It pays the VAT 20 days after the due date. Under the late payment penalty rules in the ATX-UK tax tables, what is the position?

A 3% penalty applies. Payment 20 days late falls in the 16 to 30 day band. The 6% penalty plus a daily charge at 10% per year applies only where payment is more than 30 days late, and there is no penalty up to 15 days.

  1. ANo penalty arises because the payment is within 15 days
  2. BA penalty of 3% of the VAT outstanding appliesCorrect
  3. CA penalty of 6% applies, plus a daily penalty at 10% per year
  4. DA penalty of 3% applies, plus a daily penalty at 10% per year

Explanation

The tables show no penalty for payments up to 15 days late, 3% for 16 to 30 days late, and 6% plus a daily penalty for more than 30 days late. A payment 20 days late falls in the 16 to 30 day band, so only the 3% penalty applies. The 6% plus daily penalty applies only beyond 30 days.

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