Finance Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 53 — Late payment interest
Part 2 — Special provision: late payment interest start date
406

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
5
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
10
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
15
(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—
20
(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-
25
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.
30
      (8)
A company is a market maker if—
(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.
35
Certain other amounts of inheritance tax
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)
40
Act 1975, or
(c)
Article 21 of the Inheritance (Provision for Family and Dependants)
(Northern Ireland) Order 1979,

Finance Bill
Schedule 53 — Late payment interest
Part 3 — Special provision: date to which late payment interest runs
407


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,
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.
5
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
under VATA 1994 but was not registered.
      (2)
The late payment interest start date in respect of the amount is the date
10
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
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
15
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 tax, is the date of the invoice.
      (3)
In this paragraph “unauthorised person” has the meaning given in
20
paragraph 2 of Schedule 41 to FA 2008.

Death of taxpayer
12    (1)
This paragraph applies if—
(a)
a person chargeable to an amount of revenue dies before the amount
25
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
executor is unable to pay the amount before obtaining confirmation.
      (2)
The late payment interest start date in respect of that amount is the later of
30
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
grant of probate or letters of administration or (in Scotland) the grant
35
of confirmation.
Part 3
Special provision: date to which late payment interest runs
Deduction of income tax at source
13    (1)
This paragraph applies to any income tax which—
40

Finance Bill
Schedule 53 — Late payment interest
Part 4 — Effect of interest on reliefs
408

(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
Act, and
5
(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—
(a)
the date when the income tax was paid,
10
(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,

but section 100 does not otherwise apply to the income tax.
15
      (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—
(a)
HMRC agree under section 230 of IHTA 1984 to accept property in
20
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,

the terms may provide that the amount of tax which is satisfied by the
25
acceptance of the property does not carry late payment interest after that
date.
Part 4
Effect of interest on reliefs
15    (1)
Where conditions A and B are met—
30
(a)
the appropriate adjustment is to be made of the amount of late
payment interest payable, and
(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—
35
(a)
any amount on account of income tax which is due and payable in
accordance with section 59A(2) of TMA 1970, or
(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
40
amount of tax.

Paragraph 16 makes provision about the circumstances in which P is entitled
to have a relief treated as being given by discharge.
      (4)
In this paragraph—

Finance Bill
Schedule 54 — Repayment interest
Part 1 — Repayment interest start date: general rule
409

“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
been if the tax discharged had never been charged;
“the appropriate repayment” is such repayment as is necessary to give
5
effect to the appropriate adjustment.
16    (1)
Where—
(a)
income tax or capital gains tax has been paid for a chargeable period
(“period A”), and
(b)
relief from any amount of that tax is given to a person (“P”) by
10
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
charge to tax.
      (2)
A qualifying charge to tax is any amount of tax charged on P (whether alone
15
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—
(a)
to any assessment made after the relief was given, or
(b)
to more than one assessment so as to reduce, without extinguishing,
20
the amount of tax charged.
Schedule 54
Section 101

Repayment interest
Part 1
Repayment interest start date: general rule
25
Introductory
1     (1)
This Part sets out the general rule for determining the repayment interest
start date.
      (2)
The general rule is subject to the special provision made by Part 2.
Repayment of amounts paid to HMRC
30
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—
(a)
has been paid in connection with a liability to make a payment to
35
HMRC, and
(b)
is to be repaid by them,

the date on which the payment became due and payable to HMRC.

Finance Bill
Schedule 54 — Repayment interest
Part 2 — Special provision as to repayment interest start date
410

Payment of amounts on return or claim
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,
5

the repayment interest start date is the later of the dates mentioned in sub-
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
10
(b)
the date on which the return was in fact filed or the claim was in fact
made.
Part 2
Special provision as to repayment interest start date
Income tax deducted at source
15
6
In the case of a repayment of income tax deducted at source for a tax year,
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—
20
(a)
paragraph 2 of Schedule 1B to TMA 1970 (carry back of loss relief
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
25
the later year in relation to the claim.
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
30
which the interest payment mentioned in section 375(8)(c) was made.
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
35
paid by the claimant for the tax year in which the contingency mentioned in
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—
40

Finance Bill
Schedule 54 — Repayment interest
Part 3 — Supplementary
411

(a)
section 146(1) of IHTA 1984,
(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,
5

does not carry repayment interest before the order mentioned in that
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.
10
12
In the case of an amount which is repayable under section 147(2) of IHTA
1984, the repayment interest start date is the date on which the tax was paid.
Part 3
Supplementary
Attribution of repayments
15
13    (1)
This paragraph applies for the purpose of determining, for the purposes of
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
20
TMA 1970 as is a payment in respect of income tax for that year,
(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.
25
      (3)
In so far as it is attributable to a payment made in instalments, a repayment
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
30
is a reference to—
(a)
income tax deducted (or treated as deducted) from any income, or
treated as paid on any income, in respect of that year, and
(b)
amounts which, in respect of that year, are tax credits to which
section 397(1) or 397A(2) of ITTOIA 2005 applies,
35

but does not include a reference to amounts which, in that year, are
deducted at source under PAYE regulations in respect of previous years.