87 Interest on overdue advance corporation tax and income tax on company payments.U.K.
[(1)Any tax assessable in accordance with Schedule [13 F1] or [16 F1] to [the principal Act F1] shall carry interest at the [rate applicable under section 178 of the Finance Act 1989 F2] from the date when the tax becomes due and payable until payment F3.
(2)Where—
(a)advance corporation tax paid in respect of distributions made in any return period is repaid under paragraph 4 of the said Schedule [13 F1] in consequence of the receipt of franked investment income in a later return period; or
(b)income tax paid in respect of payments made in any return period is repaid or discharged under paragraph 5 of the said Schedule [16 F1] in consequence of the receipt in a later return period of a payment on which income tax is borne by deduction,
the repayment or discharge shall not affect interest under this section on the tax so repaid or discharged for such time as is specified in subsection (3) below but, subject to that, this section shall apply as if any such tax which is repaid or discharged had never become payable.
(3)The time for which interest is not affected is—
(a)any time before the expiration of fourteen days from the end of the later return period, unless the return for that period is made earlier in those fourteen days; and
(b)if that return is made earlier in those fourteen days, any time ending before the date on which the return is made.
(4)Interest shall not be payable under this section on the tax charged by any assessment unless the total amount of the interest exceeds [£30 F4]. F5
(5)Subsection (4) above shall have effect as if all advance corporation tax due from a company in accordance with paragraph 3(1) of the said Schedule [13 F1] for any return period, whether or not it is actually assessed, were included in a single assessment, and similarly in the case of all income tax due from a company in accordance with paragraph 4(1) of the said Schedule [16 F1] for any return period. F5
(6)In this section “return period” means a period for which a return is required to be made under the said Schedule [13 F1] or [16 F1].
(7)It is hereby declared that this section applies to advance corporation tax and income tax which, in accordance with either of those Schedules, is paid without the making of any assessment (but is paid after it is due), and that where the tax is charged by an assessment (whether or not any part of it has been paid when the assessment is made) this section applies as respects interest running before as well as after the making of the assessment F6.]
[(8)Tax assessable as mentioned in subsection (1) above shall carry interest from the date when it becomes due and payable even if that date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882 F7.] F8
Textual Amendments
F1Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.
F2Finance Act 1989 s. 179(1)(b)and S.I. 1989 No. 1298from 18August 1989.Previously
“prescribed rate”.And see S.I. 1989 No. 1297for regulations made, and interest rate set, under Finance Act 1989 s. 178.See also Table I Vol. 1for rates of interest.
F3 See—S. I. 1986 No. 482 (in Part III Vol. 5) regn. 7(4)—application of s. 87to tax to which Finance Act 1972 Sch. 20applies by virtue of S.I. 1986 No. 482 regn. 7.S. I. 1987 No. 530 (in Part III Vol. 5) regn. 14(2)—modification of s. 87in relation to tax assessable in respect of non-resident entertainers and sportsmen.
F4Finance Act 1980 s.62in relation to interest on tax charged by assessments issued after1August1980.
F5 See Finance Act 1989 s. 158—subs. (4)ceases to have effect in respect of assessments relating to an accounting period beginning on or after a day to be appointed.
F6Finance Act 1972 s.111andSch.24 para.10for1973—74et seq.
F7 Added byFinance (No.2) Act 1975 s.46(3)(b)in relation to tax charged by assessments notices of which were issued after31July1975.
F8 See—Finance Act 1981 s.134andSch.17 para.15(4)—application of this section to the special tax on banking deposits.
Modifications etc. (not altering text)
C1S. 87(1)(7)(8) applied (1.10.1993) by S.I. 1993/2004, reg.11(10)