ACCA TX ^UK Syllabus F. Value Added Tax - Penalties and interest for late filing and late payment - Past Papers ^{9 / 11}

For the previous three value added tax (VAT) quarters, E-Commerce plc has been late in submitting its VAT returns and in paying the related VAT liabilities. The company is therefore currently serving a default surcharge period.

As part of your firm’s tax audit for the year ended 31 March 2014, you have discovered that E-Commerce plc has been careless in incorrectly treating the supply of standard rated services received from VAT registered businesses situated elsewhere within the European Union. This careless incorrect treatment has resulted in an underpayment of VAT to HM Revenue and Customs of £8,200 for the year ended 31 March 2014.

Required:
(i) Advise E-Commerce plc of the default surcharge implications if during the current default surcharge period it is late in paying a further VAT liability, and what the company will need to do in order to revert to a clean default surcharge record. (3 marks)

For the previous three value added tax (VAT) quarters, E-Commerce plc has been late in submitting its VAT returns and in paying the related VAT liabilities. The company is therefore currently serving a default surcharge period.

As part of your firm’s tax audit for the year ended 31 March 2014, you have discovered that E-Commerce plc has been careless in incorrectly treating the supply of standard rated services received from VAT registered businesses situated elsewhere within the European Union. This careless incorrect treatment has resulted in an underpayment of VAT to HM Revenue and Customs of £8,200 for the year ended 31 March 2014.

Required:
(iii) Explain why E-Commerce plc will be permitted to disclose the underpayment of VAT of £8,200 by entering this amount on its next VAT return, and state whether or not default interest will be due. (2 marks)

For the previous three value added tax (VAT) quarters, E-Commerce plc has been late in submitting its VAT returns and in paying the related VAT liabilities. The company is therefore currently serving a default surcharge period.

As part of your firm’s tax audit for the year ended 31 March 2014, you have discovered that E-Commerce plc has been careless in incorrectly treating the supply of standard rated services received from VAT registered businesses situated elsewhere within the European Union. This careless incorrect treatment has resulted in an underpayment of VAT to HM Revenue and Customs of £8,200 for the year ended 31 March 2014.

Required:
(iv) Advise E-Commerce plc as to the maximum amount of penalty which is likely to be charged by HM Revenue and Customs in respect of the underpayment of VAT of £8,200, and by how much this penalty would be reduced as a result of the company’s unprompted disclosure. (2 marks)

VAT payable for the quarter ended 31/3/2013 was £30,030.

For the quarters ended 31 December 2010 and 30 September 2012, Greenzone Ltd was two months late in submitting its VAT returns and in paying the related VAT liabilities. All of the company’s other VAT returns have been submitted on time, and the related VAT liabilities have been paid on time.

Required:
(ii) Advise Greenzone Ltd of the default surcharge implications if it is two months late in submitting its VAT return for the quarter ended 31 March 2013 and in paying the related VAT liability; (2 marks)