Income and Corporation Taxes Act 1988

827 VAT penalties etc. U.K.

M1 (1) Where, under [F1 Part IV of the Value Added Tax Act 1994], a person is liable to make a payment by way of—

(a) penalty under any of sections [F2 60 to 70]; or

(b) interest under section [F3 74]; or

(c) surcharge under section [F3 59];

the payment shall not be allowed as a deduction in computing any income, profits or losses [F4 for any corporation tax purposes (but see also subsection (3)(a) below)].

[F5 (1A) Where a person is liable to make a payment by way of a penalty under any of sections 8 to 11 of the Finance Act 1994 (penalties relating to excise), that payment shall not be allowed as a deduction in computing any income, profits or losses [F4 for any corporation tax purposes (but see also subsection (3)(a) below)].]

[F6 (1B) Where a person is liable to make a payment by way of—

(a) penalty under any of paragraphs 12 to 19 of Schedule 7 to the Finance Act 1994 (insurance premium tax), or

(b) interest under paragraph 21 of that Schedule,

the payment shall not be allowed as a deduction in computing any income, profits or losses [F4 for any corporation tax purposes (but see also subsection (3)(a) below)].]

[F7 (1C) Where a person is liable to make a payment by way of—

(a) penalty under Part V of Schedule 5 to the Finance Act 1996 (landfill tax), or

(b) interest under paragraph 26 or 27 of that Schedule,

the payment shall not be allowed as a deduction in computing any income, profits or losses [F4 for any corporation tax purposes (but see also subsection (3)(a) below)].]

[F8 (1D) Where a person is liable to make a payment by way of—

(a) any penalty under any provision of Schedule 6 to the Finance Act 2000 (climate change levy),

(b) interest under paragraph 70 of that Schedule (interest on recoverable overpayments etc.),

(c) interest under any of paragraphs 81 to 85 of that Schedule (interest on climate change levy due and on interest), or

(d) interest under paragraph 109 of that Schedule (interest on penalties),

the payment shall not be allowed as a deduction in computing any income, profits or losses [F4 for any corporation tax purposes (but see also subsection (3)(a) below)].]

[F9 (1E) Where a person is liable to make a payment by way of—

(a) any penalty under any provision of Part 2 of the Finance Act 2001 (aggregates levy),

(b) interest under any of paragraphs 5 to 9 of Schedule 5 to that Act (interest on aggregates levy due and on interest),

(c) interest under paragraph 6 of Schedule 8 to that Act (interest on recoverable overpayments etc.), or

(d) interest under paragraph 5 of Schedule 10 to that Act (interest on penalties),

the payment shall not be allowed as a deduction in computing any income, profits or losses [F4 for any corporation tax purposes (but see also subsection (3)(a) below)].]

[F10 (1F) Where a person is liable to make a payment by way of a penalty under section 25 or 26 of the Finance Act 2003 (evasion of, or contravention of relevant rule relating to, certain taxes and duties under the management of the Commissioners of Customs and Excise etc) the payment shall not be allowed as a deduction in computing any income, profits or losses [F4 for any corporation tax purposes (but see also subsection (3)(a) below)].]

[F11 (1G) Where a person is liable to make a payment by way of—

(a) any penalty under Part 4 of the Finance Act 2003 (stamp duty land tax), or

(b) interest under any provision of that Part,

the payment shall not be allowed as a deduction in computing any income, profits or losses [F4 for any corporation tax purposes (but see also subsection (3)(a) below)].]

[F12 (1H) Where a person is liable to make a payment by way of penalty under Schedule 24 to the Finance Act 2007 (penalties for errors) the payment shall not be allowed as a deduction in computing any income, profits or losses for any corporation tax purposes (but see also subsection (3)(a) below).]

(2) A sum paid to any person by way of supplement under section [F13 79 of that Act] shall be disregarded for all purposes of corporation tax [F14 (but see also subsection (3)(b) below)].

[F15 (3) For income tax purposes—

(a) provision corresponding to that made by this section (other than subsection (2) above) is made by sections 54 and 869 of ITTOIA 2005, and

(b) provision corresponding to that made by subsection (2) above is made by section 777 of ITTOIA 2005 (as read with Chapter 10 of Part 6 of that Act).]

Textual Amendments

F1 Words in s. 827(1) substituted (1.9.1994) by Value Added Tax Act 1994 (c. 23), s. 101(1), Sch. 14 para. 10(2)(a)

F2 Words in s. 827(1)(a) substituted (1.9.1994) by Value Added Tax Act 1994 (c. 23), s. 101(1), Sch. 14 para. 10(2)(b)

F3 Words in s. 827(1)(b)(c) substituted (1.9.1994) by Value Added Tax Act 1994 (c. 23), s. 101(1), Sch. 14 para. 10(2)(c)

F4 Words in s. 827 substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 332(a) (with Sch. 2)

F5 S. 827(1A) inserted (1.11.1994 for specified purposes and 1.1.1995 otherwise) by Finance Act 1994 (c. 9), ss. 18(7), 19(1) (with s. 19(3)); S.I. 1994/2679, arts. 2, 3 (with art. 4(3))

F6 S. 827(1B) inserted (3.5.1994) by Finance Act 1994 (c. 9), Sch. 7 para. 31

F7 S. 827(1C) inserted (29.4.1996) by Finance Act 1996 (c. 8), Sch. 5 para. 40

F8 S. 827(1D) inserted (28.7.2000) by Finance Act 2000 (c. 17), Sch. 7 para. 4

F9 S. 827(1E) inserted (11.5.2001) by Finance Act 2001 (c. 9), s. 49(3)

F10 S. 827(1F) inserted (27.11.2003) by Finance Act 2003 (c. 14), ss. 24(7), 40; S.I. 2003/2985, art. 2

F11 S. 827(1G) inserted (10.7.2003 subject to Sch. 19 to the amending Act) by Finance Act 2003 (c. 14), Sch. 18 para. 3(6)

F12 S. 827(1H) added (1.4.2009) by The Finance Act 2008, Schedule 40 (Appointed Day, Transitional Provisions and Consequential Amendments) Order 2009 (S.I. 2009/571), art. 1(1), Sch. 1 paras. 9, 10

F13 Words in s. 827(2) substituted (1.9.1994) by Value Added Tax Act 1994 (c. 23), s. 101(1), Sch. 14 para. 10(2)(d)

F14 Words in s. 827(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 332(b) (with Sch. 2)

F15 S. 827(3) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 332(c) (with Sch. 2)

Marginal Citations

M1 Source—1986 s.53.