The government has announced an amendment to the interest provisions for late payment, repayment and penalties for several taxes, including Pay As You Earn (PAYE).
The measure, outlined in the policy document announced in the Budget, clarifies existing interest provisions to ensure they apply as intended and it affects persons paying interest late or receiving repayments where the taxes are: Corporation Tax; Diverted Profit Tax; Inheritance Tax; Stamp Duty; Stamp Duty Land Tax (SDLT); and interest on penalties under PAYE.
This measure clarifies the detail of how interest is applied to late payments for Corporation Tax, Stamp Duty and SDLT and to penalties imposed for failure to comply with obligations under PAYE.
The proposed revisions, which will be operative one the Finance Bill 2018/19 reaches Royal Assent, will regularise historical arrangements for charging interest in relation to payments and repayments of certain taxes (including Corporation Tax and Diverted Profits Tax) and the charging of interest on unpaid and late paid penalties for PAYE.
The legislation will have immediate retrospective and prospective effect with retrospection dating back to:
- 18 August 1989 in respect of section 178 Finance Act 1989
- 6 May 2014 for section 101 Finance Act 2009
The legislation will also ensure that in future the interest provisions in Finance Act 2009 apply in relation to penalties charged under Promoters of Tax Avoidance Schemes.
