ExpertEasy2 marksMultiple Choice
ACCA · Question 13 · Value added tax (VAT)
A company submits its VAT return and payment 10 days late. It is the company's first default. What is the consequence under the VAT default surcharge regime?
A company submits its VAT return and payment 10 days late. It is the company's first default. What is the consequence under the VAT default surcharge regime?
Answer options:
A.
2% penalty
B.
5% penalty
C.
Surcharge Liability Notice
D.
£100 fixed penalty
How to approach this question
Recall the VAT default surcharge rules. The first late payment/return triggers a warning notice, not an immediate fine.
Full Answer
C.Surcharge Liability Notice✓ Correct
Under the default surcharge regime, the first default (late return or late payment) results in HMRC issuing a Surcharge Liability Notice (SLN). This acts as a warning and lasts for 12 months. No financial penalty is charged for the first default.
Common mistakes
Assuming a financial penalty applies immediately on the first default.
Practice the full ACCA TX — Taxation Practice Exam 6
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