Further Aspects of VAT (2)

Question 1

What are penalties for?

Answer 1

Late filing
Late payment
Errors

Question 2

Result of penalties?

Answer 2

Late payment interest

Question 3

When does a business incur a penalty point?

Answer 3

For every quarterly return that it submits late

Question 4

When must penalty points expire?

Answer 4

After two years unless the threshold of four points has been reached

Question 5

What happens once the threshold has been reached for filing?

Answer 5

A penalty of £200 is charged

Question 6

When is a further £200 charged for late filing?

Answer 6

For each subsequent late return until the business has completed a period of compliance

Question 7

What must business do in a period of compliance

Answer 7

Business mist then submit VAT returns on time over a 12-month period of compliance for points to be rest to zero

Question 8

How are fixed penalties charged?

Answer 8

Depending on how late the payment is

Question 9

When is a 4% daily penality incurred?

Answer 9

If the payment is more than 30 days late

Question 10

What is also charged for late payment penalties and interest?

Answer 10

From due date until VAT payment is made

Question 11

Penalty for up to 15 days?

Answer 11

Fixed: No
Daily: No
Interest: Yes

Question 12

Penalty for 16-30 days?

Answer 12

Fixed: 2%
Daily: None
Interest: Yes

Question 13

Penalty for 30+ days?

Answer 13

Fixed: 4%
Daily: 4% daily penalty
Interest: Yes

Question 14

When may an error be corrected on next return?

Answer 14

If it is greater than: £10000 AND 1% * net VAT turnover for return period (max £50000)

Question 15

What is a correction of an error on a later return?

Answer 15

An unprompted disclosure of error and fuller disclosure is required for penalty to be reduced

Question 16

When is default interest on unpaid VAT as a result of error only charged?

Answer 16

Where limit is exceeded for error to be corrected on next VAT return

Question 17

How should other erors be notified?

Answer 17

TO HMRC in writing

Question 18

Where is interest not deductible in computing taxable profits charged? (default itnerest)

Answer 18

On VAT which is the subject of an assessment or which could have been subject of an assessment but was paid before the assessment was raised

Question 19

When does default interest run from?

Answer 19

Date VAT should have been paid to actual date of payment but cannot run for more than three years before assessment or voluntary payment