Autumn Budget 2018 – Amendment to interest provisions for late payment, repayment and penalties

Before the 2018 Budget announcement, interest charging powers were contained in:

  • Section 178 Finance Act 1989, in relation to interest on Corporation Tax, Diverted Profit Tax, Inheritance Tax, Stamp Duty, Stamp Duty Land Tax and Promoters of Tax Avoidance Schemes (POTAS)
  • Section 101 Finance Act 2009, in relation to interest charged on penalties in relation to PAYE

Finance Bill 2018/19 will regularise historical arrangements for charging interest, enshrining existing policy within HMRC in legislation. This will affect payments and repayments of certain taxes, and charging of interest on penalties for PAYE.

The legislation will have retrospective effect, dating back to:

  • 18 August 1989 in respect of s 178 Finance Act 1989
  • 6 May 2014 for s 101 Finance Act 2009

Going forward, the legislation will ensure that interest provisions in s 101 Finance Act 2009 apply in future to penalties charged under POTAS.

This measure relates to interest provisions where persons are paying tax late or receiving repayments for the following taxes:

  • Corporation Tax
  • Diverted Profit Tax
  • Inheritance Tax
  • Stamp Duty
  • Stamp Duty Land Tax (SDLT)

It will also apply to penalties charged for failure to comply with PAYE obligations and penalties charged under POTAS legislation.

Our interpretation of this measure is that there will be no real change for those who would be subject to interest charges for any of the above situations. The legislation will confirm existing policy.