Late Payments Interest calculation question

gabriellenlewis

A customer owes £3000, exc VAT and it is 45 days late. The current base rate is 1.5%. Calculate the interest charge.

So, I did 1.5 + 8 = 9.5%
(0.095 x 3000) = £285 annual interest
(285/365) = £0.78 interest per day
(0.78 x 45) = £35.14

But the answer is apparently £42.16, please tell me where i am going wrong?! Thanks.

AlisonSwanson

You need to include VAT - Gross amount x 9.5%

Then multiply by 45/365.

gabriellenlewis

AlisonSwanson said:

You need to include VAT - Gross amount x 9.5%



Then multiply by 45/365.</blockquote