ExpertHard2 marksMultiple Choice
ACCA · Question 11 · The UK tax system and its administration
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?
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:
A.
0%
B.
2%
C.
4%
D.
5%
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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