Finance Bill

House of Commons

Session 2008 - 09
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Finance Bill

Finance Bill
Schedule 53 — Late payment interest
Part 2 — Special provision: late payment interest start date
390

      (2)
Late payment interest is payable only on the amount by which each of the
payments on account exceeds 50% of the overpayment.
      (3)
In determining for the purposes of this paragraph what amount (if any) is
repayable to P as an overpayment—
(a)
no account is to be taken of any amount which has been paid on
5
account otherwise than under section 59A(2) of TMA 1970, and
(b)
no account is to be taken of any amount which is payable by way of
capital gains tax.
      (4)
In this paragraph—
“overpayment” means an amount repayable in accordance with section
10
59B(3), (4) or (5) of TMA 1970;
“payment on account” means an amount payable in accordance with
section 59A(2) of that Act.
Part 2
Special provision: late payment interest start date
15
Amendments and discovery assessments etc
3     (1)
This paragraph applies to any amount which is due and payable as a result
of—
(a)
an amendment or correction to an assessment or self-assessment
(“assessment A”),
20
(b)
an assessment made by HMRC in place of or in addition to an
assessment (“assessment A”) which was made by a taxpayer, or
(c)
an assessment made by HMRC in place of an assessment
(“assessment A”) which ought to have been made by a taxpayer.
      (2)
The late payment interest start date in respect of that amount is the date
25
which would have been the late payment interest start date if—
(a)
assessment A had been complete and accurate and had been made
on the date (if any) by which it was required to be made, and
(b)
accordingly, the amount had been due and payable as a result of
assessment A.
30
      (3)
In the case of a person (“P”) who failed to give notice as required under
section 7 of TMA 1970 (notice of liability to tax), the reference in sub-
paragraph (1)(c) to an assessment which ought to have been made by P is a
reference to the assessment which P would have been required to make if an
officer of HMRC had given notice under section 8 of that Act.
35
      (4)
In this paragraph “assessment” means any assessment or determination
(however described) of any amount due and payable to HMRC.
Amounts postponed pending appeal under TMA 1970
4     (1)
This paragraph applies to any amount if payment of the amount is
postponed under section 55 of TMA 1970 pending the determination of an
40
appeal against an assessment of income tax or capital gains tax.
      (2)
The late payment interest start date in respect of that amount is the date
which would have been the late payment interest start date if there had been
no appeal.

Finance Bill
Schedule 53 — Late payment interest
Part 2 — Special provision: late payment interest start date
391

Overpayment of tax
5     (1)
This paragraph applies to any amount of income tax or capital gains tax
which is assessed and recoverable by virtue of an assessment under section
30 of TMA 1970 (recovery of overpayment of tax etc).
      (2)
The late payment interest start date in respect of that amount is 31 January
5
next following the tax year in respect of which the assessment under section
30 is made.
Recovery of payment of tax credit or interest
6
In respect of any amount charged by an assessment mentioned in section
252(5) of ICTA (recovery of payment of tax credit or interest on such a
10
payment), the late payment interest start date is the date when the payment
of tax credit or interest was made.
Inheritance tax payable by instalments
7     (1)
The late payment interest start date for each instalment of an amount to
which this paragraph applies is the date on which that instalment is to be
15
paid.
      (2)
This paragraph applies to any amount of inheritance tax which is payable by
instalments under section 229 of IHTA 1984.
      (3)
This paragraph also applies to any amount of inheritance tax which is
payable by instalments under section 227 of IHTA 1984 if the value on which
20
the amount is payable is attributable to—
(a)
the value of qualifying property within subsection (2)(b) or (c) of that
section (shares or securities, or business or interest in a business), or
(b)
value treated as reduced under Chapter 2 of Part 5 of that Act.
      (4)
But this paragraph does not apply to an amount by virtue of sub-paragraph
25
(3)(a) if the qualifying property is shares or securities of a company which—
(a)
falls within sub-paragraph (5), but
(b)
does not fall within sub-paragraph (6) or (7).
      (5)
A company falls within this sub-paragraph if its business consists wholly or
mainly of one or more of the following—
30
(a)
dealing in securities, stocks or shares, land or buildings, or
(b)
making or holding investments.
      (6)
A company falls within this sub-paragraph if its business consists wholly or
mainly in being a holding company (as defined in section 1159 of the
Companies Act 2006) of one or more companies not falling within sub-
35
paragraph (5).
      (7)
A company falls within this sub-paragraph if its business is carried on in the
United Kingdom and is—
(a)
wholly that of a market maker, or
(b)
that of a discount house.
40
      (8)
A company is a market maker if—

Finance Bill
Schedule 53 — Late payment interest
Part 2 — Special provision: late payment interest start date
392

(a)
it holds itself out at all normal times in compliance with the rules of
The Stock Exchange as willing to buy and sell securities, stocks or
shares at a price specified by it, and
(b)
it is recognised as doing so by the Council of The Stock Exchange.
Certain other amounts of inheritance tax
5
8
An amount of inheritance tax which is underpaid in consequence of any of
the following provisions—
(a)
section 146(1) of IHTA 1984,
(b)
section 19 of the Inheritance (Provision for Family and Dependants)
Act 1975, or
10
(c)
Article 21 of the Inheritance (Provision for Family and Dependants)
(Northern Ireland) Order 1979,

does not carry late payment interest before the order mentioned in that
provision is made.
9
In the case of an amount which is payable under section 147(4) of IHTA 1984,
15
the late payment interest start date is the day after the end of the period of 6
months beginning with the date of the testator’s death.
VAT due from persons not registered as required
10    (1)
This paragraph applies where an amount of value added tax is due from a
person (“P”) in respect of a period during which P was liable to be registered
20
under VATA 1994 but was not registered.
      (2)
The late payment interest start date in respect of the amount is the date
which would have been the late payment interest date in respect of that
amount if P had become registered when P had first become liable to be so.
Unauthorised VAT invoices
25
11    (1)
This paragraph applies where an unauthorised person issues an invoice
showing an amount as being value added tax or as including an amount
attributable to value added tax.
      (2)
The late payment interest start date in respect of the amount which is shown
as being value added tax or which is to be taken as representing value added
30
tax is the date of the invoice.
      (3)
In this paragraph “unauthorised person” has the meaning given in
paragraph 2 of Schedule 41 to FA 2008.

Death of taxpayer
35
12    (1)
This paragraph applies if—
(a)
a person chargeable to an amount of revenue dies before the amount
becomes due and payable, and
(b)
the executor or administrator is unable to pay the amount before
obtaining probate or letters of administration or (in Scotland) the
40
executor is unable to pay the amount before obtaining confirmation.

Finance Bill
Schedule 53 — Late payment interest
Part 4 — Effect of interest on reliefs
393

      (2)
The late payment interest start date in respect of that amount is the later of
the following—
(a)
the date which would be the late payment interest start date apart
from this paragraph, and
(b)
the day after the end of the period of 30 days beginning with the
5
grant of probate or letters of administration or (in Scotland) the grant
of confirmation.
Part 3
Special provision: date to which late payment interest runs
Deduction of income tax at source
10
13    (1)
This paragraph applies to any income tax which—
(a)
was payable under Chapter 15 of Part 15 of ITA 2007 (collection:
deposit-takers, building societies and certain companies) in respect
of payments within section 946 of that Act made in a return period,
(b)
was not paid on the date when it was due under section 951 of that
15
Act, and
(c)
has subsequently been discharged or repaid under section 953 of that
Act because the person who made the payments received payments
on which it suffered income tax by deduction in a later return period.
      (2)
The income tax carries late payment interest until the earliest of—
20
(a)
the date when the income tax was paid,
(b)
the date when the person delivered a return for the later return
period, and
(c)
the end of the period of 14 days beginning with the end of the later
return period,
25

but section 100 does not otherwise apply to the income tax.
      (3)
In this paragraph “return period” means a period for which a return is
required to be made under Chapter 15 of Part 15 of ITA 2007.
Property accepted in lieu of inheritance tax
14
If, in the case of any amount of inheritance tax—
30
(a)
HMRC agree under section 230 of IHTA 1984 to accept property in
satisfaction of the amount, and
(b)
under terms of that acceptance the value to be attributed to the
property for the purposes of the acceptance is determined as at a date
earlier than that on which the property is actually accepted,
35

the terms may provide that the amount of tax which is satisfied by the
acceptance of the property does not carry late payment interest after that
date.
Part 4
Effect of interest on reliefs
40
15    (1)
Where conditions A and B are met—
(a)
the appropriate adjustment is to be made of the amount of late
payment interest payable, and

Finance Bill
Schedule 54 — Repayment interest
Part 1 — Repayment interest start date: general rule
394

(b)
accordingly, the appropriate repayment (if any) is to be made of any
late payment interest previously paid.
      (2)
Condition A is that any amount of late payment interest is payable on—
(a)
any amount on account of income tax which is due and payable in
accordance with section 59A(2) of TMA 1970, or
5
(b)
any amount of income tax or capital gains tax which becomes due
and payable in accordance with section 55 or 59B of TMA 1970.
      (3)
Condition B is that relief from the tax is given by a discharge of any of that
amount of tax.

Paragraph 16 makes provision about the circumstances in which P is entitled
10
to have a relief treated as being given by discharge.
      (4)
In this paragraph—
“the appropriate adjustment” is such adjustment as is necessary to
secure that the total amount of late payment interest, if any, paid or
payable on the amount of tax in question is the same as it would have
15
been if the tax discharged had never been charged;
“the appropriate repayment” is such repayment as is necessary to give
effect to the appropriate adjustment.
16    (1)
Where—
(a)
income tax or capital gains tax has been paid for a chargeable period
20
(“period A”), and
(b)
relief from any amount of that tax is given to a person (“P”) by
repayment,

P is entitled to require that the amount repaid be treated for the purposes of
paragraph 15(3), so far as it will go, as if it were a discharge of a qualifying
25
charge to tax.
      (2)
A qualifying charge to tax is any amount of tax charged on P (whether alone
or together with other persons) by or by virtue of any assessment for or
relating to period A.
      (3)
But sub-paragraph (1) does not permit an amount to be applied—
30
(a)
to any assessment made after the relief was given, or
(b)
to more than one assessment so as to reduce, without extinguishing,
the amount of tax charged.
Schedule 54
Section 101

Repayment interest
35
Part 1
Repayment interest start date: general rule
Introductory
1     (1)
This Part sets out the general rule for determining the repayment interest
start date.
40
      (2)
The general rule is subject to the special provision made by Part 2.

Finance Bill
Schedule 54 — Repayment interest
Part 2 — Special provision as to repayment interest start date
395

Repayment of amounts paid to HMRC
2
In the case of an amount which has been paid to HMRC, the repayment
interest start date is the later of date A and (where applicable) date B.
3
Date A is the date on which the amount was paid to HMRC.
4
Date B is, in the case of an amount which—
5
(a)
has been paid in connection with a liability to make a payment to
HMRC, and
(b)
is to be repaid by them,

the date on which the payment became due and payable to HMRC.
Payment of amounts on return or claim
10
5     (1)
In the case of an amount which—
(a)
has not been paid to HMRC, and
(b)
is payable by virtue of a return having been filed or a claim having
been made,

the repayment interest start date is the later of the dates mentioned in sub-
15
paragraph (2).
      (2)
The dates are—
(a)
the date (if any) on which the return was required to be filed or the
claim was required to be made, and
(b)
the date on which the return was in fact filed or the claim was in fact
20
made.
Part 2
Special provision as to repayment interest start date
Income tax deducted at source
6
In the case of a repayment of income tax deducted at source for a tax year,
25
the repayment interest start date is 31 January next following that year.
Carry back of losses and averaging
7
In the case of any amount which is to be repaid as a result of a claim for relief
under—
(a)
paragraph 2 of Schedule 1B to TMA 1970 (carry back of loss relief
30
from later year to earlier year), or
(b)
Chapter 16 of Part 2 of ITTOIA 2005 (claim for averaging of profits of
farmers etc over two consecutive years),

the repayment interest start date is 31 January next following the year that is
the later year in relation to the claim.
35
MIRAS
8
In the case of any payment under regulations under section 375(8) of ICTA
(MIRAS: payments equivalent to deductions which could have been made),
the repayment interest start date is 31 January next following the tax year in
which the interest payment mentioned in section 375(8)(c) was made.
40

Finance Bill
Schedule 54 — Repayment interest
Part 3 — Supplementary
396

Income accumulated under certain trusts
9
In the case of a repayment made in consequence of a claim under section 228
of the Income Tax Act 1952 (relief in respect of income accumulated under
trusts), the repayment is to be treated as if it were a repayment of income tax
paid by the claimant for the tax year in which the contingency mentioned in
5
that section happened.
Certain amounts of inheritance tax
10
An amount of inheritance tax which is overpaid in consequence of any of the
following provisions—
(a)
section 146(1) of IHTA 1984,
10
(b)
section 19 of the Inheritance (Provision for Family and Dependants)
Act 1975, or
(c)
Article 21 of the Inheritance (Provision for Family and Dependants)
(Northern Ireland) Order 1979,

does not carry repayment interest before the order mentioned in that
15
provision is made.
11
In the case of an amount which is repayable on a claim under section 146(2)
or 150 of IHTA 1984, the repayment interest start date is the date on which
the claim is made.
12
In the case of an amount which is repayable under section 147(2) of IHTA
20
1984, the repayment interest start date is the date on which the tax was paid.
Part 3
Supplementary
Attribution of repayments
13    (1)
This paragraph applies for the purpose of determining, for the purposes of
25
this Schedule, how a repayment to a person (“P”) in respect of income tax for
a tax year is to be attributed to payments made in respect of that tax.
      (2)
Such a repayment is to be attributed to payments in the following order—
(a)
first, to so much of any payment made by P under section 59B of
TMA 1970 as is a payment in respect of income tax for that year;,
30
(b)
second, in two equal parts to each of the payments (if any) made by
P under section 59A of that Act on account of income tax for that
year, and
(c)
third, to income tax deducted at source for that year.
      (3)
In so far as it is attributable to a payment made in instalments, a repayment
35
is to be attributed to a later instalment before being attributed to an earlier
one.
Interpretation
14
In this Schedule any reference to income tax deducted at source for a tax year
is a reference to—
40
(a)
income tax deducted (or treated as deducted) from any income, or
treated as paid on any income, in respect of that year, and