UK Tax Authority To Repay Overcharged Interest

by Amanda Banks, Tax-News.com, London

12 September 2005

The UK's HMRC has announced that it will repay interest it overcharged during August and September, 2003; however, it will not seek to recover interest that it overpaid.

Due to an administrative error the rate of default interest charged on amounts under-declared was too high by one percentage point for the period between 6 August 2003 and 5 September 2003.

As regards VAT, HMRC says it will seek to identify businesses that were overcharged default interest due to this error. However, due to the size of the VAT register it may take some time to identify all affected businesses. VAT registered businesses are therefore invited to write to HMRC at the address below, quoting their VAT registration number, if they were charged interest for the period between 6 August 2003 and 5 September 2003.

Tax Administration Team
4th Floor SW
Queens Dock
Liverpool
L74 4AA

For Environmental and Insurance Premium Taxes, Air Passenger Excise and Customs Duties, there is no need for individual businesses to submit claims for interest overcharged in respect of these taxes and duties. HMRC will seek to identify all businesses that have been overcharged interest by 31 December 2005. Further information will be issued if,
exceptionally, HMRC are unable to identify all affected businesses by the end of 2005.

HMRC will pay interest on any money repaid to a business as a result of the error. Individual businesses do not need to submit a separate claim for compensation.

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