Taxes Management Act 1970

PART IXInterest on Overdue Tax

86Interest on overdue tax

(1)Any tax charged by any assessment to which this subsection applies shall carry interest at the prescribed rate from the date when the tax becomes due and payable until payment.

This subsection applies to—

(a)any assessment to income tax made under Schedule A or Schedule D,

(b)any assessment to surtax,

(c)any assessment to capital gains tax,

(d)any assessment to corporation tax.

(2)Where any tax is paid not later than two months from the date on which it becomes due and payable, the interest thereon under this section shall be remitted.

As respects tax becoming due and payable before 1st July 1968 this subsection has effect with the substitution of " three months " for " two months ".

(3)Interest shall not be payable under this section on the tax charged by any assessment unless—

(a)the total tax charged by that assessment exceeds £1,000, and

(b)the total amount of the interest exceeds £5,

so, however, that in the case of tax becoming due and payable before 19th April 1967, paragraph (b) above has effect with the substitution of " £1 " for " £5 ".

(4)Interest shall not be deemed to have begun to run under this section from any date before 1st January 1948.

87Interest on overdue income tax on company distributions etc.

(1)Any tax assessable in accordance with Schedule 9 to the principal Act shall carry interest at the prescribed rate from the date when the tax becomes due and payable until payment.

(2)The discharge or repayment of tax in respect of distributions, or payments other than distributions, made in any month in a year of assessment by setting off, under paragraph 3 of Schedule 9 to the principal Act, income tax in respect of any franked investment income or other payment received in a later month in that year shall not affect interest under this section on the tax so discharged or repaid—

(a)for any period before the expiration of fourteen days from the end of the later month, unless the claim is made on an earlier date (but after the end of that later month), and

(b)if the claim is made on an earlier date (but after the end of the later month), any period ending before that earlier date,

but subject to that, this section shall apply as if any such tax which is discharged or repaid had never become payable.

(3)Interest shall not be payable under this section on the tax charged by any assessment unless the total amount of the interest exceeds—

(a)in the case of tax becoming due and payable before 19th April 1967. £1.

(b)in the case of tax becoming due and payable on or after that date, £5.

(4)Subsection (3) above shall have effect—

(a)as if all tax due from a company in accordance with paragraph 2(3) of Schedule 9 to the principal Act for any month, whether or not it is actually assessed, were included in a single assessment, and

(b)as if all tax due from a company in accordance with paragraph 1(2) of the said Schedule 9 for any year, whether or not it is actually assessed, were included in a single assessment.

(5)No tax under Schedule 9 to the principal Act shall carry interest from a date earlier than 19th November 1966.

(6)In this section " month " means a month of a year of assessment, that is to say a month beginning on the sixth day of a month of the calendar year.

(7)It is hereby declared that this section applies to income tax which, in accordance with Schedule 9 to the principal Act, is paid without the making of any assessment (but is paid after it is due), and that where the tax is charged by an assessment (whether or not any part of it has been paid when the assessment is made) it applies as respects interest running before as well as after the making of the assessment.

88Interest on tax recovered to make good loss due to taxpayer's fault

(1)Where an assessment has been made for the purpose of making good to the Crown a loss of tax wholly or partly attributable to the fraud, wilful default or neglect of any person, the tax charged by the assessment, or as the case may be such part thereof as corresponds to the part so attributable, shall carry interest at the prescribed rate from the date on which the tax ought to have been paid until payment.

(2)This section shall not apply in relation to tax under Schedule 9 to the principal Act.

(3)Tax carrying interest under this section shall not carry interest under section 86 above.

(4)The Board may at their discretion mitigate (whether before or after judgment) any interest due under this section and may stay or compound any proceedings for the recovery thereof.

(5)For the purposes of this section the date when tax ought to have been paid shall be taken to be—

(a)in the case of income tax, 1st January in the year of assessment for which the tax is charged, but subject to paragraphs (b) and (c) below,

(b)in the case of one-half of any income tax specified in section 4(2) of the principal Act, the following 1st July,

(c)in the case of surtax, 1st January in the year of assessment next following the year for which the tax is charged,

(d)in the case of capital gains tax, 6th July in the year of assessment next following the year for which the tax is charged,

(e)in the case of corporation tax, the date nine months from the end of the accounting period for which the tax is charged or, where section 244(1) of the principal Act applies, at the end of the interval mentioned in that subsection (without the alternative of one month from the making of the assessment).

89The prescribed rate of interest

(1)In this Part of this Act " the prescribed rate" means—

(a)for the purposes of sections 86 and 87 above, the rate specified in column 2 of the Table below,

(b)for the purposes of section 88 above, the rate specified in column 3 of the Table below.

The references in column 1 of this Table to any period before or after a specified date apply whether or not interest continues to run after that period, or, as the case may be, runs from before that period.

(2)The Treasury may, by order in a statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament, from time to time increase or decrease any rate or rates of interest prescribed by subsection (1) above, either for the purposes of all the provisions of this Part of this Act, or so as to prescribe different rates for different purposes.

(3)Any variation of the rate of interest prescribed under subsection (2) above shall apply to interest for periods beginning on or after the date when the order is expressed to come into force, whether or not interest runs from before that date.

90Disallowance of relief for interest on tax

Interest payable under this Part of this Act shall be paid without any deduction of income tax and shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes.

91Effect on interest of reliefs

(1)Where any amount of interest is payable under section 86 or section 88 of this Act in relation to an assessment, and relief from tax charged by the assessment is given to any person by a discharge of any of that tax, such adjustment shall be made of the said amount, and such repayment shall be made of any amounts previously paid under those provisions in relation to the assessment, as are necessary to secure that the total sum, if any, paid or payable under those provisions in relation to the assessment is the same as it would have been if the tax discharged had never been charged.

(2)Where relief from tax paid for any chargeable period is given to any person by repayment, he shall be entitled to require that the amount repaid shall be treated for the purposes of this section, so far as it will go, as if it were a discharge of the tax charged on him (whether alone or together with other persons) by or by virtue of any assessment for or relating to the same chargeable period, so, however, that it shall not be applied to any assessment made after the relief was given and that it shall not be applied to more than one assessment so as to reduce, without extinguishing, the amount of tax charged thereby.

(3)Notwithstanding anything in the preceding provisions of this section, no relief, whether given by way of discharge or repayment, shall be treated for the purposes of this section as—

(a)affecting tax charged by any assessment to surtax unless it is a relief from surtax, or

(b)affecting tax charged by any assessment to income tax made under Schedule A or Schedule D if either—

(i)it is a relief from surtax, or

(ii)it arises in connection with income taxable otherwise than under Schedule A or Schedule D, or

(iii)it relates to a source income from which is taxable otherwise than under Schedule A or Schedule D.

(4)For the purposes of this section a relief from corporation tax or capital gains tax shall not be treated as affecting tax charged by any assessment unless the assessment is to the same tax.

92Remission in certain cases of interest on tax in arrear by reason of exchange restrictions

(1)The provisions of this section shall have effect where the Board are satisfied as respects any tax carrying interest under section 86 of this Act—

(a)that the tax is in respect of income or chargeable gains arising in a country outside the United Kingdom, and

(b)that, as the result of action of the government of that country, it is impossible for the income or gains to be remitted to the United Kingdom, and

(c)that having regard to the matters aforesaid and to all the other circumstances of the case it is reasonable that the tax should for the time being remain uncollected,

and the Board allow the tax to remain uncollected accordingly.

(2)Interest on the said tax shall, subject to subsection (3) below, cease to run under the said section 86 as from the date on which the Board were first in possession of the information necessary to enable them to be satisfied as aforesaid and, if the said date is not later than three months from the time when the tax became due and payable, the interest thereon under the said section 86 in respect of the period before the said date shall be remitted.

(3)Where, under subsection (2) above, interest has ceased to run on any tax and thereafter demand is made by the collector or other proper officer for payment of all or any of that tax, interest under the said section 86 shall again begin to run from the date of the demand in respect of the amount demanded:

Provided that where all or any part of the amount demanded is paid not later than three months from the date of the demand, the interest under the said section 86 on the amount so paid running from the date of the demand shall be remitted.