Changes To Interest Rules On Tax Repayments Effective

by Jason Gorringe, Tax-News.com, London

03 November 2003

Irish Finance Minister Charlie McCreevy (pictured) announced the implementation last week of new rules dealing with the repayment of tax and the interest rates applied by the Revenue to such repayments.

The relevant legislative provisions, which apply across the various tax heads, are contained in the Finance Act 2003 and are subject to Commencement Orders by the Minister.

The Finance Act 2003 changes mean that:

- there will be a general time limit of four years for claims for repayment of tax

- likewise, Revenue’s right to assessments will be limited to 4 years (except in the case of fraud or neglect where no time limit applies)

- the arrangements for repayment of tax and interest on tax will be put on the same basis

- interest will be calculated from six months after a valid claim is made except where the claim arises from a mistaken application of the law by Revenue, in which case it will be calculated from the date the tax was overpaid or from the end of the tax period to which the claim relates, whichever is the later.

The rate of interest on repayments under the new scheme is being reduced from just under 6% per annum to just over 4% per annum. The new daily rate is 0.011%.

“These changes will better balance the position of the tax claimant while safeguarding the position of the Exchequer,” commented Mr McCreevy on announcement of the reforms.

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