ExpertMedium2 marksMultiple Choice
ACCA · Question 11 · Value added tax (VAT)
Section A
Under the VAT default surcharge regime (for periods starting before 1 Jan 2023) / new penalty regime, if a company submits its VAT return late but pays the VAT due on time, what is the consequence?
Section A
Under the VAT default surcharge regime (for periods starting before 1 Jan 2023) / new penalty regime, if a company submits its VAT return late but pays the VAT due on time, what is the consequence?
Answer options:
A.
A flat rate penalty of £100 is automatically applied.
B.
A penalty point may be issued under the new regime, but no financial penalty is immediately due if it is a first offence.
C.
A surcharge of 2% of the VAT due is applied.
D.
HMRC will immediately deregister the company.
How to approach this question
Differentiate between late filing and late payment under the new VAT penalty regime. Late filing accrues points.
Full Answer
B.A penalty point may be issued under the new regime, but no financial penalty is immediately due if it is a first offence.✓ Correct
Under the new VAT penalty regime introduced for periods starting on or after 1 January 2023, late submission of a VAT return results in a penalty point. A financial penalty of £200 is only levied once a specific threshold of points is reached (e.g., 4 points for quarterly returns). Since the VAT was paid on time, no late payment penalties apply.
Common mistakes
Applying the old default surcharge rules or assuming a financial penalty is immediate for a first late filing.
Practice the full ACCA TX — Taxation Practice Exam 2
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