ACCA Advanced Taxation (ATX) Practice Exam

True or False: For corporation tax, interest runs from the due date to the payment date.

1. True

2. False

3. Depends on the amount due

4. Depends on the payment method

The correct answer is: True

The statement is true. In the context of corporation tax, interest does indeed accrue from the due date of the tax payment until the actual payment date. This means that if a corporation does not pay its tax on time, it will incur interest charges for the period it is overdue. This serves as a penalty for late payments and is intended to encourage prompt compliance with tax obligations. The mechanism ensures that corporations are incentivized to pay their taxes by the due date and prevents delays in revenue collection for the government. The rate of interest may be set by regulations and can vary, but the core principle of interest running from the due date until payment date remains consistent across jurisdictions following similar tax structures. Other options, such as variations based on the amount due or payment method, do not accurately reflect how interest on unpaid corporation tax is calculated. The rules for when interest applies are generally straightforward and based solely on the timing of the payment relative to its due date.