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

Zeta Ltd paid its VAT liability of £40,000 exactly 22 days after the due date. No earlier late payments have been recorded. Using the late payment penalty table in the ATX-UK tax rates, what is the penalty rate that applies to this payment?

A 3% penalty applies. A VAT payment made 22 days late falls within the 16 to 30 day band, where the penalty is 3% of the unpaid VAT. Only payments up to 15 days late escape a penalty, and the 6% plus daily charge needs more than 30 days.

  1. ANo penalty, because the payment was less than 30 days late
  2. B3% of the unpaid VATCorrect
  3. C6% of the unpaid VAT
  4. D6% plus a daily penalty at an annual rate of 10%

Explanation

Under the table, a payment 16 to 30 days late attracts a 3% penalty. 22 days falls in that band, so the penalty is 3% x £40,000 = £1,200. No penalty applies only up to 15 days, and the 6% plus daily penalty applies only beyond 30 days.

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