Section A

Under the VAT penalty regime for late payment, a taxpayer is 35 days late in paying their VAT liability of £10,000. They have not proposed a Time to Pay arrangement. What is the first late payment penalty percentage applied to the outstanding amount at day 30?

Answer options:

How to approach this question

Apply the new VAT late payment penalty rules: 2% at day 15, plus another 2% at day 30 (total 4%).

Full Answer

C.4%✓ Correct

Under the new VAT late payment penalty regime, if payment is not made within 15 days, a 2% penalty applies. If the amount is still outstanding at day 30, an additional 2% penalty is charged, bringing the total first late payment penalty to 4% of the outstanding tax.

Common mistakes

Applying the old default surcharge rules or forgetting the cumulative nature of the day 15 and day 30 penalties.

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