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HMRC Announces Interest Rate Amendments

by Jason Gorringe, for LawAndTax-News.com, London

09 August 2007


HM Revenue and Customs on Wednesday announced new rates of interest on direct and indirect taxes and national insurance contributions paid late and overpaid.

These new rates of interest, which took effect on 6 August 2007, come as a result of the recent movement in market rates.

The UK tax authority revealed yesterday that the rate of interest charged on income tax, national insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax paid late, tax credits overpayments in cases of fraud, neglect and on penalties charged, and on tax charged by an assessment for the purpose of making good to the Crown a loss of tax wholly or partly attributable to failure or error by the taxpayer, has changed from 7.5% to 8.5%.

The rate of interest on overpaid income tax, national insurance contributions, capital gains tax, stamp duty, stamp duty land tax and stamp duty reserve tax (repayment supplement) has changed from 3% to 4%.

Meanwhile, the rate of interest for development land tax, petroleum revenue tax (including supplementary petroleum duty and advance petroleum revenue tax), and on advance corporation tax and income tax on company payments which became due on or before 13 October 1999 paid late or overpaid has moved from 5.75% to 6.50%.

The rate of interest on late payment of income tax on company payments which became due on or after 14 October 1999 has changed from 7.50% to 8.50%.

The rate of interest for late payments or repayments of inheritance tax, capital transfer tax and estate duty changes from 4% to 5%.

Key interest rate changes announced by HMRC on Wednesday with regard to corporation tax included that:

  • The rate of interest for either late payments or repayment of corporation tax for accounting periods ended on or before 30 September 1993 (pre CT (pay and file)), changed from 5.75% to 6.50%.
  • The rate of interest charged on unpaid corporation tax for accounting periods ending on or after 1 October 1993 (under CT (pay and file)) changed from 6% to 6.75%.
  • The rate of interest paid on overpaid corporation tax for accounting periods ending on or after 1 October 1993 (under CT (pay and file)) changed from 2.75% to 3.50%.
  • The rate of interest on unpaid corporation tax for accounting periods ending on or after 1 July 1999 (other than underpaid CT instalments) changed from 7.50% to 8.50%.
  • The rate of interest on overpaid corporation tax for accounting periods ending after 1 July 1999, in respect of periods after the normal due date, changes from 4% to 5%.

Meanwhile, the rate of default interest charged on:

  • Underdeclared VAT, air passenger duty, insurance premium tax, landfill tax, climate change levy, aggregates levy;
  • Excessive repayments of VAT, insurance premium tax, land fill tax, climate change levy, aggregates levy and customs duties recovered by assessment; and
  • Late payment of customs duty

changed from 7.50% to 8.50%.

Finally, the rate of statutory interest paid:

  • Where an official error has caused an overpayment, a failure to claim credit, or a delay in certain repayments of VAT, insurance premium tax, land fill tax, climate change levy, aggregates levy and excise duties; or
  • Where there has been undue delay in processing a claim for repayment of excise duty and customs duty

changed from 4% to 5%.


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