Amendment to interest provisions for late payment, repayment and penalties

30 October 2018

This measure seeks to clarify existing interest provisions to ensure they apply as intended and it will affect persons paying interest late or receiving repayments where the taxes are Corporation Tax (CT), Diverted Profit Tax (DPT), Stamp Duty (SD), Stamp Duty Land Tax (SDLT), Inheritance Tax (IHT) and interest on penalties under Pay as you earn (PAYE).

It will also clarify the detail of how interest is applied to late payments for CT, SD and SDLT and to penalties imposed for failure to comply with obligations under PAYE as well as providing clarification and confirmation of the basis for interest calculations in respect of DPT and repayment interest by HMRC, thus ensuring that the 2009 interest provisions apply in relation to penalties charged under the Promoters of Tax Avoidance Schemes (POTAS) legislation.

This measure was announced by Written Ministerial Statement on 19 July 2018 and the subsequent extension to include PAYE penalties was announced at Budget 2018. It clarifies existing legislation, restoring the law to the position currently used and understood.  

It will come in to operation from Royal Assent of the Finance Bill 2018-19 and will have retrospective and prospective effect from the date the relevant interest was first applied.

Further detail can be found on page 186 of the Overview of Tax Legislation and Rates.