Taxes Management Act 1970

PART IX U.K. INTEREST ON OVERDUE TAX F1

Textual Amendments

F1 See—Finance Act 1984 Sch.14 para.6(4)—notwithstanding anything inPart IXpayments of capital gains tax postponed underFinance Act 1984 Sch.14not to carry interest for any period before tax becomes payable underFinance Act 1984 Sch.14 para.11.Finance Act 1989 s. 124and Sch. 14 para. 5—payment by installments of capital gains tax on gifts.S.I. 1987 No. 530 (in Part III Vol. 5) regn. 11(3)—tax under assessments in relation to non-resident entertainers and sportsmen to be treated for the purposes of Part IXas income tax underSch. D.

Modifications etc. (not altering text)

C1 Part IX (ss. 86-92) applied (27.7.1993 with effect in relation to the year 1993-94 and subsequent years of assessment) by 1993 c. 34, s. 122(2)(3)

86 [Interest on overdue tax. U.K.

(1) Any tax charged by an assessment to which this section applies shall carry interest at the [rate applicable under section 178 of the Finance Act 1989 F2 ] from the reckonable date until payment.

(2) This section applies to—

(a) an assessment to income tax under Schedule A, Schedule C, Schedule D or Schedule E,

(b) an assessment charging income tax at a rate other than the basic rate on income from which income tax has been deducted (otherwise than under section [203 F3 ] of the principal Act) or from or on which income tax is treated as having been deducted or paid or income chargeable under Schedule F,

(c) an assessment to capital gains tax,

(d) an assessment to corporation tax other than an assessment made under Schedule [13 to the principal Act F3 ] (advance corporation tax) F4 F5 .

[F6 [F7 (2A) In any case where—

(a) on a claim under section 393A(1) of the principal Act, the whole or any part of a loss incurred in an accounting period (the “later period”) is set off for the purposes of corporation tax against profits of a preceding accounting period (the “earlier period”),

(b) the earlier period does not fall wholly within the period of twelve months immediately preceding the later period, and

(c) if the claim had not been made, an amount of corporation tax assessed for the earlier period would carry interest in accordance with this section,

then, in determining the amount of interest payable under this section on corporation tax unpaid for the earlier period, no account shall be taken of any reduction in the amount of that tax which results from the claim, except so far as concerns interest for any time after the day following the expiry of the period of nine months from the end of the later period.]]

[(3) For the purposes of this section—

(a) the reckonable date in relation to any tax charged by an assessment to income tax under Schedule E, and

(b) [F8 subject to subsections (3A) and (4A)] below, the reckonable date in relation to tax charged by any other assessment to which this section applies,

is the date on which the tax becomes due and payable.

(3A) [F9 Subject to subsection (4A) below,]where an appeal has been made against an assessment and any of the tax charged by the assessment is due and payable on a date later than the date given by the Table in subsection (4) below, the reckonable date in relation to the tax so due and payable is the later of—

(a) the date given by that Table, and

(b) the date on which the tax would have been due and payable if there had been no appeal against the assessment (assuming in a case where the tax would not have been charged by the assessment if there had been no appeal that it was so charged).

(4) The Table referred to in subsection (3A) above is as follows— F10 ] F11 .

TABLE

Description of tax	Dat eapplicable
1. Tax charged by an assessment to income tax under Schedule A or an assessment to income tax under Schedule D other than an assessment made under Part III of Schedule [3 F12 ] to the principal Act (machinery for assessment, charge and payment of income tax under Schedule C and, in certain cases, Schedule D).	1. The 1st July following the end of the year of assessment.
2. F13 . . .	2. F13 . . .
3. Tax charged by an assessment charging income tax as mentioned in subsection (2)(b) above F14 .	3. [The 1st June following the 1st December mentioned in section [5(4) F15 ] of the principal Act F16 .]
4. Tax charged by an assessment to capital gains tax.	4. [The 1st June following the 1st December mentioned in section [F17 7 of the 1992 Act].]
5. Tax charged by an assessment to corporation tax other than an assessment made under Schedule [13 to the principal Act F15 ].	5. The last day of the six months following—
	(a) in a case where section [10(1) F15 ] of the principal Act applies, the end of the nine months there mentioned F18 ;
	(b) in a case where section 244(1) of that Act applies, the end of the interval there mentioned from the end of the accounting period to which the assessment relatesF19 ; or
	(c) in a case where section [478 F15 ] of that Act applies, the last day on which the tax could have been paid within the time limit F20 imposed by subsection (2)(a) of that section. F21

[F22 (4A) For the purposes of this section where—

(a) a notice served under section 11 above at any time after the appointed day for the purposes of section 82 of the M1 Finance (No. 2) Act 1987 (amendment of section 11 for the purposes of pay and file) is to be taken as requiring a company to make a return for any accounting period ending on or before the day appointed for the purposes of section 10 of the principal Act; and

(b) the tax charged by any assessment to corporation tax for that accounting period does not become due and payable until after the date nine months from the end of that accounting period,

the reckonable date, in relation to tax charged for that accounting period by that assessment, is the date mentioned in paragraph (b) above (instead of the date which would otherwise be determined under subsection (3) or (3A) above).

(4B) The Board may at their discretion mitigate (whether before or after judgment) any interest due under this section in a case where the reckonable date is determined under subsection (4A) above and may stay or compound any proceedings for the recovery thereof.]

(5) Tax charged by an assessment to which this section applies shall carry interest from the reckonable date even if that date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882.

(6) Where the amount of interest payable under this section on the tax charged by any assessment does not exceed [£30 F23 ], that interest may, if the Board think fit, be remitted F24 ] F25 F26 .

Textual Amendments

F2 Finance Act 1989 s. 179(1)(b)and S.I. 1989 No. 1298from 18 August 1989. Previously

“prescribed rate”.And see S.I. 1989 No. 1297for regulations made, and interest rate set, under Finance Act 1989 s. 178See also Table I Vol. 1for rates of interest.

F3 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F4 Subs. (d)omitted byFinance (No. 2) Act 1987 s. 86(2)for accounting periods ending after a day to be appointed (not earlier than 31 March 1992).

F5 See -Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 375 -assessments undersubsection (3)to be regarded as if included among those specified ins. 86(2). Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 14 para. 6(2)(a) -assessments underpara. 6 to be regarded as if they were included among those specified ins. 86(2). S.I. 1986 No. 1948 (in Part III Vol. 5) regn. 33(3) -assessments underS.I. 1986 No. 1948(personal equity plans) to be treated as assessments specified ins. 86(2). S.I. 1987 No. 352 (in Part III Vol. 5) regn. 6(6) - Taxes Management Act 1970 (c. 9, SIF 63:1)to apply to assessments underS.I. 1987 No. 352(pension scheme surpluses: administration) as if unders. 86(2)but omittings. 86(3) and (4)and substituting a different definition of'the reckonable date'

F6 S. 86(2A) repealed (prosp.) by Finance Act 1991 (c. 31, SIF 63:1), ss. 73(3)(5), 123, Sch. 15 para. 1(2), Sch. 19, Pt. V, Note 2

F7 S. 86(2A) inserted (25.7.1991) by Finance Act 1991 (c. 31, SIF 63:1), s. 73(3)(5), Sch. 15, para. 1(1)(with saving in Sch. 15, para. 1(2))

F8 Words in s. 86(3)(b) substituted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para. 3(2)

F9 Words in s. 86(3A) inserted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para. 3(3)

F10 Finance Act 1989 s. 156(1)for tax charged by any assessment notice of which is issued after 30 July 1982. Previously

“In this section “reckonable date” means— (a) in relation to any tax the date for the payment of which is given by section 55 above and which, if there had been no appeal, would have become due and payable on an earlier date, that earlier date or the date mentioned in subsection (4) below, whichever is the later, and [(aa) in relation to any tax payable in accordance with the determination of an appeal against an assessment but which had not been charged by the assessment, the date which if it had been charged would by virtue of paragraph (a) above have been the reckonable date; and(a)] (b) in relation to any tax not falling within paragraph (a) [or paragraph (aa)(a)] above, the date on which it becomes due and payable. (4) The date referred to in subsection (3)(a) above is the date on which the tax becomes due and payable or the date given by the following Table, whichever is the earlier.”

(a)Finance Act 1982 s.69(1)(a)(b)in relation to notices of assessment issued after30July1982.

F11 See—Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 5for dates of payment of income tax.S.I. 1986 No. 1948 (in Part III Vol. 5) regn. 33(3)—sums charged by assessments under S.I. 1986 No. 1948(personal equity plans) to be treated as tax specified in the Table in s. 86(4).

F12 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F13 S. 86(4) Table para. 2 repealed (16.7.1992 having effect in relation to transactions effected on or after 1.10.1992) by Finance (No. 2) Act 1992 (c. 48), ss. 63, 82, Sch. 11 paras. 3, 6, Sch. 18 Pt. VII (8).

F14 See—Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 375(4)(b)—sums charged by assessements under s. 375(3)to be regarded as if they were included in para. 3 of the Table.Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 14 para. 6(2)(b)—sums charged by assessments under para. 6to be regarded as if they were included in para. 3 of the Table.

F15 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F16 Finance Act 1980 s.61(3)in relation to tax for1980—81et seq.

F17 Words in s. 86(4) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) by Taxation of Chageable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 2(8) (with ss. 60, 101(1), 171, 201(3)).

F18 See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 30 para. 1(7)for modification of para. 5(a)of the Table for any accounting periods of companies to which Finance Act 1970 s. 244applied for the last accounting period ending before 17 March 1987 and which fell within Income and Corporation Taxes Act 1988 Sch. 30 para. 1(3) or 1(4).

F19 Para. 5(b)repealed by Finance Act 1987 s. 72(7)and Sch. 16 Part Vfor accounting periods beginning on or after 17 March 1987.

F20 See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 30—the reference to the time limit imposed by s. 478to be construed as a reference to the time limit for an accounting period of a building society ending in the year 1989-90.

F21 Para. 5of the Table omitted by Finance (No. 2) Act 1987 s. 86(2)for accounting periods ending after a day to be appointed.

See—Finance Act 1989 s. 157(1)for application of para. 5 totax charged under s. 252(1)as a result of a s. 240claim made on or after 14 March 1989. (Ceases to have effect for accounting periods ending after the appointed day).Finance Act 1989 s. 157(2)–(4)for application of para. 5 where there is a carry back of surplus ACT in relation to claims made under s. 239(3)on or after 14 March 1989. (Ceases to have effect for accounting periods ending after the appointed day.

F22 S. 86(4A)(4B) inserted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para. 3(4)

F23 Finance Act 1980 s.62for interest on assessments issued after1August1980.

F24 Finance (No. 2) Act 1975 s.46(1)in relation to tax charged by assessments where notices issued after31July1975.

F25 See—Taxes Management Act 1970 (c. 9, SIF 63:1) s. 109—application of s. 86to tax assessable on close companies under Income and Corporation Taxes Act 1970 (c. 10, 63:1) ss. 286, 288and 289.Finance Act 1973 s.38andSch.15 para.4—collection of interest on tax assessed on non-residents unders.38 (territorial extension of charges to tax).Finance Act 1981 s.134andSch.17 para.15(4)—application ofs.86to the special tax on banking deposits.Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 285—adjustment of interest where tax assessed on husband in respect of wife's income is collectable from her or her executors.Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) ss. 306 and 307—application of s. 86in relation to business start-up relief and to business expansion scheme relief.

F26 See - Finance Act 1989 ss. 158 and 187 and Sch. 1 - Subs. (6)ceases to have effect in respect of demands etc. made on or after a day to be appointed.Social Security Act 1975 Sch. 2 para. 7 (in Part II Vol. 5) -collection of Class 4 contributions with income tax.

Modifications etc. (not altering text)

C2 S. 86 applied (N.I.) (1.7.1992) by Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7), ss. 15(3), 173(4), Sch. 2 para. 6(1)

C3 S. 86 excluded (E.W.S.) (1.7.1992) by Social Security Contributions and Benefits Act 1992 (c. 4), ss. 16(3), 177(4), Sch. 2 para. 6(1) (as substituted temporarily until 19.4.1993 by Social Security (Consequential Provisions) Act 1992 (c. 6), ss. 6, 7(2), Sch. 4 para. 8; S.I. 1993/1025, art. 2)

C4 S. 86 excluded (N.I.) (1.7.1992) by Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7), ss. 15(3), 173(4), Sch. 2 para. 6(1) (as substituted temporarily until 19.4.1993 by Social Security (Consequential Provisions) (Northern Ireland) Act 1992 (c. 9), ss. 6, 7(2), Sch. 4 para. 7; S.I. 1993/1079, art. 2)

Marginal Citations

M1 1987 c. 51.

86A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F27 U.K.

Textual Amendments

F27 A development land tax provision added byDevelopment Land Tax Act 1976 (c. 24) Sch.8 para.21 Development Land Tax Act 1976repealed byFinance Act 1985 s.98(6)andSch.27 Part X.

87 Interest on overdue advance corporation tax and income tax on company payments. U.K.

[(1) Any tax assessable in accordance with Schedule [13 F28 ] or [16 F28 ] to [the principal Act F28 ] shall carry interest at the [rate applicable under section 178 of the Finance Act 1989 F29 ] from the date when the tax becomes due and payable until payment F30 .

(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 F28 ] 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 F28 ] 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 F31 ]. F32

(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 F28 ] 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 F28 ] for any return period. F32

(6) In this section “return period” means a period for which a return is required to be made under the said Schedule [13 F28 ] or [16 F28 ].

(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 F33 .]

[(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 F34 .] F35

Textual Amendments

F28 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F29 Finance 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.

F30 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.

F31 Finance Act 1980 s.62in relation to interest on tax charged by assessments issued after1August1980.

F32 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.

F33 Finance Act 1972 s.111andSch.24 para.10for1973—74et seq.

F34 Added byFinance (No.2) Act 1975 s.46(3)(b)in relation to tax charged by assessments notices of which were issued after31July1975.

F35 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)

C5 S. 87(1)(7)(8) applied (1.10.1993) by S.I. 1993/2004, reg.11(10)

[87A F36 Interest on overdue corporation tax etc. U.K.

(1) Corporation tax shall carry interest at the [F37 rate applicable under section 178 of the Finance Act 1989]] from the date when the tax becomes due and payable (in accordance with section [F38 10] of the principal Act) until payment.

(2) Subsection (1) above applies even if the date when the tax becomes due and payable (as mentioned in that subsection) is a non-business day within the meaning of section 92 of the M2 Bills of Exchange Act 1882.

(3) In relation to corporation tax assessed by virtue of section [F39 346(2) or 347(1) of the principal Act, [F40 137(4), 139(7) or 179(11) of the 1992 Act or section 96(8) of the Finance Act 1990]] (which enable unpaid corporation tax assessed on a company to be assessed on other persons in certain circumstances), the reference in subsection (1) above to the date when the tax becomes due and payable is a reference to the date when it became due and payable by the company.

(4) [F41 Subject to subsection (7) below]in any case where—

(a) there is in any accounting period of a company (in this subsection referred to as “the later period”) an amount of surplus advance corporation tax, as defined in subsection (3) of section [F42 239 of the principal Act], and

(b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is treated for the purposes of the said section [F42 239] as discharging liability for an amount of corporation tax for an earlier accounting period (in this subsection referred to as “the earlier period”), and

(c) disregarding the effect of the said subsection (3), an amount of corporation tax for the earlier period would carry interest in accordance with this section,

then, in determining the amount of interest payable under this section on corporation tax unpaid for the earlier period, no account shall be taken of any reduction in the amount of that tax which results from the said subsection (3) except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (1) above).

[F43 (4A) In a case where—

(a) there is for an accounting period of a company (“the later period”) a relievable amount within the meaning of section 131 of the Finance Act 1993 (non-trading exchange gains and losses),

(b) as a result of a claim under subsection (5) or (6) of that section the whole or part of the relievable amount for the later period is set off against the exchange profits (as defined in subsection (10) of that section) of an earlier accounting period (“the earlier period”), and

(c) disregarding the effect of subsection (5) or (6) (as the case may be) of that section, an amount of corporation tax for the earlier period would carry interest in accordance with this section,

then, in determining the amount of interest payable under this section on corporation tax unpaid for the earlier period, no account shall be taken of any reduction in the amount of that tax resulting from the claim under subsection (5) or (6) of that section except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable, as mentioned in subsection (1) above.]

(5) A sum assessed on a company by such an assessment as is referred to in [F44 section 252(5) of the principal Act] (recovery of payment of tax credit or interest on such a payment) shall carry interest at the [F45 rate applicable under section 178 of the Finance Act 1989] from the date when the payment of tax credit or interest was made until the sum assessed is paid.

[F46 (6) In any case where—

(a) on a claim under section 393A(1) of the principal Act, the whole or any part of a loss incurred in an accounting period (“the later period”) has been set off for the purposes of corporation tax against profits of a preceding accounting period (“the earlier period”);

(b) the earlier period does not fall wholly within the period of twelve months immediately preceding the later period; and

(c) if the claim had not been made, there would be an amount or, as the case may be, an additional amount of corporation tax for the earlier period which would carry interest in accordance with this section,

then, for the purposes of the determination at any time of whether any interest is payable under this section or of the amount of interest so payable, the amount mentioned in paragraph (c) above shall be taken to be an amount of unpaid corporation tax for the earlier period except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable as mentioned in subsection (1) above.

(7) Where, in a case falling within subsection (6)(a) and (b) above—

(a) there is in the earlier period, as a result of the claim under section 393A(1) of the principal Act, an amount of surplus advance corporation tax, as defined in subsection (3) of section 239 of that Act; and

(b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is to be treated for the purposes of the said section 239 as discharging liability for an amount of corporation tax for an accounting period before the earlier period,

the claim under the said subsection (3) shall be disregarded for the purposes of subsection (6) above but subsection (4) above shall have effect in relation to that claim as if the reference in the words after paragraph (c) to the later period within the meaning of subsection (4) above were a reference to the period which, in relation to the claim under the said section 393A(1), would be the later period for the purposes of subsection (6) above.]

Textual Amendments

F36 S. 87A inserted by Finance (No. 2) Act 1987 (c. 51), ss. 85, 95(2)

F37 Finance Act 1989, s. 179(1)(b) and S.I. 1989/1298. Previously “prescribed rate”. And see S.I. 1989/1297 for regulations made, and interest rate set, under Finance Act 1989, s. 178

F38 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 844, Sch. 29 para. 10(4)(a). Previously “243(4)”

F39 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 844, Sch. 29 para. 10(4)(b). Previously “266(2), section 267(3C), section 277(1) or section 278(5) of the Taxes Act”.

F40 Words in s. 87A(3) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 2(9) (with ss. 60, 101(1), 171, 201(3))

F41 Words in s. 87A(4) inserted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para. 4(1)

F42 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 844, Sch. 29 para. 10(4)(c)(d). Previously “85 of the Finance Act 1972” and “85”respectively.

F43 S. 87A(4A) inserted (27.7.1993) by 1993 c. 34, s. 170, Sch. 18 para.1

F44 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 844, Sch. 29 para. 10(4)(d). Previously “subsection (2) of section 102 of the Finance Act 1972”

F45 Finance Act 1989, s. 179(1)(b), S.I. 1989/1298. Previously “prescribed rate”. And see S.I. 1989/1297 for regulations made and interest rate set under Finance Act 1989, s. 178

F46 S. 87A(6)(7) substituted (27.7.1993) for s. 87A(6) by 1993 c. 34, s. 120, Sch. 14 para. 4(2)

Modifications etc. (not altering text)

C6 S. 87A modified by Income and Corporation Taxes Act 1988 (c. 1), s. 438A, Sch. 19AB para. 3 (as inserted (25. 7. 1991) by Finance Act 1991 (c. 31), s. 49, Sch. 8)

C7 S. 87A extended (with modifications) (25.7.1991) by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 438A Sch. 9B para. 5(6) (which was added (25.7.1991) by Finance Act 1991 (c. 31, SIF 63:1), s. 49, Sch. 8)

S. 87A applied (with modifications) (2.10.1992) by S.I. 1992/2326, reg. 6(5)(6)

Marginal Citations

M2 1882 c. 61.

88 Interest on tax recovered to make good loss due to taxpayer’s fault. [1960 s.58(1); 1962 s.26(1); 1965 Sch.X 1(1); 1966 Sch.VI 8(2).] U.K.

(1) Where an assessment has been made for the purpose of making good to the Crown a loss of tax wholly or partly attributable to

[(a) a failure to give a notice, make a return or produce or furnish a document or other information required by or under the Taxes Acts, or

(b) an error in any information, return, accounts or other document delivered to an inspector or other officer of the Board F47 ,]

the tax charged by the assessment, or as the case may be such part thereof as corresponds to the part so attributable, [shall, if an inspector or the Board so determine, carry F48 ] interest at the [rate applicable under section 178 of the Finance Act 1989 F49 ] from the date on which the tax ought to have been paid until payment F50 .

M3 (2) This section shall not apply in relation to [F51 ] tax under Schedule [13 or 16 to the principal Act F52 ].

[(3) Where it is finally determined that any tax carries interest under this section, the tax shall carry no interest under section 86 or 86A above, (and, accordingly, any interest under either of those sections which has been paid before the final determination shall be set off against the amount of the interest under this section); and for the purposes of this subsection a determination that tax carries interest is not final until it can no longer be varied, whether by any Commissioners on appeal or by the order of any court F53 .]

M4 (4) The Board may at their discretion mitigate (whether before or after judgment) any interest due under this section and may stay or compound any proceedings for the recovery thereof.

M5 (5) For the purposes of this section thedate when tax ought to have been paid shall be taken to be—

(a) in the case of income tax, 1st January in the year of assessment for which the tax is charged, but subject to paragraphs (b) and (c) below,

(b) in the case of one-half of any income tax specified in section [5(2) F54 ] of the principal Act, the following 1st July,

[(c) in the case of any income tax specified in section [5(4) F54 ] of the principal Act, the following [1st December F55 ] F56 ,]

M6 (d) in the case of capital gains tax, [1st December F55 ] in the year of assessment next following the year for which the tax is charged,

M7 (e) in the case of corporation tax, the date nine months from the end of the accounting period for which the tax is charged F57 F58 . . . F59

(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F60

[(6) Tax charged by an assessment mentioned in subsection (1) above shall carry interest from the date when it ought to have been paid even if that date was a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882 F61 .]

(7) In paragraph (a) of subsection (1) above the reference to a failure to do something includes, in relation to anything required to be done at a particular time or within a particular period, a reference to a failure to do it at that time or within that period; and, accordingly, section 118(2) of this Act shall not apply for the purposes of that paragraph F62 .] F63

Textual Amendments

F47 Finance Act 1989 s. 159(2)in relation to failures occurring, and errors in any information or documents delivered, on or after 27 July 1989. Previously

“the fraud, wilful default or neglect of any person,”.

F48 Finance Act 1989 s. 160(1).Previously

“shall carry”.

F49 Finance Act 1989 s. 179(1)(b)(i)and S.I. 1989 No. 1298from 18 August 1989. Previously

“prescribed rate”.And see S.I. 1989 No. 1297for regulations made, and interest rate set, under s. 178.See also Table I Vol. 1for rates of interest.

F50 SeeFinance Act 1984 Sch.14 para.2(3)(b)—Finance Act 1984 Sch.14not have effect to allow postponement of capital gains tax carrying interest by virtue ofs.88(1),unless the interest by reason of neglect of any person and that neglect is remedied before1July1985.

F51 See Finance (No. 2) Act 1987 s. 86(4)(a)for wording to be inserted for accounting periods ending after a day to be appointed.

F52 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32previously amended by Finance Act 1972 s.111andSch.24 para.11.

F53 Finance Act 1989 s. 161.Previously

“(3) Tax carrying interest under this section shall not carry interest under section 86(a) above.”

(a)

Amended in relation to development land tax byDevelopment Land Tax Act 1976 Sch.8 para.22. Development Land Tax Act 1976repealed byFinance Act 1985 s.98(6)andSch.27 Part X.

F54 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32

F55 Finance Act 1980 s.61(4)for1980—81et seq.

F56 Finance Act 1971 ss.37and38andSch.6 para.87for1973—74et seq.

F57 Subs. (e)omitted by Finance (No. 2) Act 1987 s. 86(4)for accounting periods ending after a day to be appointed.

F58 SeeFinance Act 1966 s.27andSch.6 para.23(5)—s.88applied to certain proceedings for the recovery of excessive overspill relief underFinance Act 1965 s.84 (transitional relief for companies with overseas trading income).

F59 Words repealed by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 844and Sch. 31See 1987edition for text.

F60 A development land tax provision added byDevelopment Land Tax Act 1976 (c. 24) Sch.8 para.22 Development Land Tax Act 1976repealed byFinance Act 1985 s.98(6)andSch.27 Part X.

F61 Finance (No.2) Act 1975 s.46(4)in relation to tax charged by assessments where notices issued after31July1975.

F62 Finance Act 1989 s. 159(3)in relation to failures occuring, and errors in any information or documents delivered, on or after 27 July 1989.

F63 See—Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 14 para. 7(3)(c)—application of s. 88to sums claimed under s. 266(5)(b)to which the claimant was not entitled.Finance Act 1989 s. 57(3)—application of s. 88to medical insurance relief.

Modifications etc. (not altering text)

C8 S. 88 extended (25.7.1991) by Finance Act 1991 (c. 31, SIF 63:1), s. 33(3)(c)

C9 S. 88(1)(4)(5)(a)(b) applied (N.I.) (1.7.1992) by Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7), ss. 15(3), 173(4), Sch. 2 para. 6(1)

C10 S. 88(1)(4)(5)(a)(b) extended (E.W.S.) (1.7.1992) by Social Security Contributions and Benefits Act 1992 (c. 4), ss. 16(3), 177(4), Sch. 2 para. 6(1) (as substituted temporarily until 19.4.1993 by Social Security (Consequential Provisions) Act 1992 (c. 6), ss. 6, 7(2), Sch. 4 para. 8; S.I. 1993/1025, art.2)

C11 S. 88(1)(4)(5)(a)(b) extended (N.I.) (1.7.1992) by Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7), ss. 15(3), 173(4), Sch. 2 para. 6(1) (as substituted temporarily until 19.4.1993 by Social Security (Consequential Provisions) Act 1992 (c. 9), ss. 6, 7(2), Sch. 4 para. 7; S.I. 1993/1079, art. 2)

Marginal Citations

M3 1967 Sch.XI 10(3), 12(3).

M4 1960

s.58(7).

M5 1960

s.58(2).

M6 1969

Sch.XX 14(5).

M7 1966

Sch.VI 8(2).

88A [Determinations under section 88. U.K.

(1) Notice of a determination under section 88 above shall be served on the person liable to pay the interest to which it relates and shall specify—

(a) the date on which it is issued,

(b) the amount of the tax which carries interest and the assessment by which that tax was charged,

(c) the date when for the purposes of section 88 above that tax ought to have been paid, and

(d) the time within which an appeal against the determination may be made.

(2) After the notice of a determination under section 88 above has been served the determination shall not be altered except in accordance with this section.

(3) A determination under section 88 above may be made at any time—

(a) within six years after the end of the chargeable period for which the tax carrying the interest is charged (or, in the case of development land tax, of the financial year in which the liability for that tax arose), or

(b) within three years after the date of the final determination of the amount of that tax.

(4) An appeal may be brought against a determination under section 88 above and, subject to the following provisions of this section, the provisions of this Act relating to appeals shall have effect in relation to an appeal against such a determination as they have effect in relation to an appeal against an assessment to tax.

(5) On an appeal against a determination under section 88 above section 50(6) to (8) of this Act shall not apply but the Commisioners may—

(a) if it appears to them that the tax carries no interest under that section, set the determination aside,

(b) if the determination appears to them to be correct, confirm the determination, or

(c) if the determination appears to them to be incorrect as to the amount of tax or the date on which the tax ought to have been paid, revise the determination accordingly F64 .]

Textual Amendments

F64 Finance Act 1989 s. 160(2).

89 The prescribed rate of interest. [1952 s.495(1); 1960 s.58(1); 1967 s.40(1)(3)(6); S.I. 1969/535.] U.K.

[(1) For the purposes of any provision of this Part of this Act and of section [826 of the principal Act F65 ] “the prescribed rate” means such rate as may for the time being be prescribed for the purposes of the provision in question by order made by the Treasury F66 .]

M8 (2) [The power to make an order under this section shall be exercisable by F66 ] statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament, [and any such order may be framed either so as to prescribe a single rate F66 ] for the purposes of all the provisions of this Part of this Act, or so as to prescribe different rates for different purposes F67 .

(3) [Any rate of interest prescribed by order under this section F68 ] shall apply to interest for periods beginning on or after the date when the order is expressed to come into force, whether or not interest runs from before that date. F69 F70

Textual Amendments

F65 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F66 Finance (No. 2) Act 1987 s. 89(1):Previously

“(1) In this Part of this Act “the prescribed rate” means—(a) for the purposes of sections 86(a) and 87 above, the rate specified in column 2 of the Table below,(b) for the purposes of section 88 above, the rate specified in column 3 of the Table below. The references in column 1 of this Table to any period before or after a specified date apply whether or not interest continues to run after that period, or, as the case may be, runs from before that period.”, “The Treasury may, by order in a”

and

“from time to time increase or decrease any rate or rates of interest prescribed by subsection (1) above, either”

respectively.

For orders see Part III Vol. 5under

“Interest on unpaid tax” and “Interest on unpaid tax and repayment supplement”.

(a)

Amendments in relation to development land tax added by Development Land Tax Act 1976 Sch. 8 para. 23. 1976 Act repealed by Finance Act 1985 s. 98(6)and Sch. 27 Part X.

F67 SeeOil Taxation Act 1975 s.1andSch.2 paras.1(1)and15—Oil Taxation Acts—regarding modifications in relation to petroleum revenue tax and supplementary petroleum duty.

F68 Finance (No. 2) Act 1987 s. 89(3).Previously

“Any variation of the rate of interest prescribed under subsection (2) above”

F69 See Finance Act 1988 Sch. 5 para. 3(4)—payments on account of tax by underwriters.

F70 Repealed by Finance Act 1989 ss. 178(7)and Sch. 17 Part Xfrom a day to be appointed.

Marginal Citations

M8 1967

40(2).

90 Disallowance of relief for interest on tax. [1952 s.495(4); 1960 s.58(4); 1965 Sch.X 1(1), Sch.XV 8; 1966 Sch.VI 8(2).] U.K.

Interest payable under this Part of this Act F71 shall be paid without any deduction of income tax and shall not be allowed as a deduction in computing any income, profits or losses for any tax purposes. F72 F73

Textual Amendments

F71 SeeOil Taxation Act 1975 s.1andSch.2 paras.1(1)and15—Oil Taxation Acts—regarding modifications in relation to petroleum revenue tax and supplementary petroleum duty.

F72 See Finance Act 1988 Sch. 5 para. 3(4)—payments on account of tax by underwriters.

F73 See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 19A para. 3as substituted by S.I. 1990 No. 2524.

Modifications etc. (not altering text)

C12 S. 90 applied (27.7.1993) by 1993 c. 34, s. 173, Sch. 19 Pt. II para.11(5)

91 Effect on interest of reliefs. [1952 s.496; 1960 s.58(4); 1965 Sch.X 1(1), Sch.XV 8; 1967 Sch.XI 14(5).] U.K.

(1) Where any amount of interest is payable under section 86 or section 88 of this Act in relation to an assessment, and relief from tax charged by the assessment is given to any person by a discharge of any of that tax, such adjustment shall be made of the said amount, and such repayment shall be made of any amounts previously paid under those provisions in relation to the assessment, as are necessary to secure that the total sum, if any, paid or payable under those provisions in relation to the assessment is the same as it would have been if the tax discharged had never been charged.

[F74 (1A) Where interest is payable under section 87A of this Act in respect of an amount of corporation tax for an accounting period, and relief from tax is given by a discharge of any of that corporation tax—

(a) such adjustment shall be made of the amount of interest payable under that section in respect of corporation tax for that accounting period, and

(b) such repayment shall be made of any amounts of interest previously paid under that section in respect of that corporation tax,

as are necessary to secure that the total sum (if any) paid or payable under that section in respect of corporation tax for that accounting period is the same as it would have been if the tax discharged had never been charged.

(1B) Subsection (1A) above has effect subject to section 87A(4) [F75 (6) and (7)]]of this Act.

(2) [F76 ] Where relief from tax F77 paid for any chargeable period is given to any person by repayment, he shall be entitled to require that the amount repaid shall be treated for the purposes of this section, so far as it will go, as if it were a discharge of the tax charged on him (whether alone or together with other persons) by or by virtue of any assessment for or relating to the same chargeable period, so, however, that it shall not be applied to any assessment made after the relief was given and that it shall not be applied to more than one assessment so as to reduce, without extinguishing, the amount of tax charged thereby.

[F78 (2A) In any case where—

(a) relief from corporation tax is given to any person by repayment, and

(b) that tax was paid for an accounting period ending after the day which is the appointed day for the purposes of section [F79 10 of the principal Act]],

that person shall be entitled to require that the amount repaid shall be treated for the purposes of this section, so far as it will go, as if it were a discharge of the corporation tax charged on him for that period.

M9 (3) Notwithstanding anything in the preceding provisions of this section, no relief, whether given by way of discharge or repayment, shall be treated for the purposes of this section as—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F80

(b) affecting tax charged by any assessment to income tax made under Schedule A or Schedule D if either—

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F80

(ii) it arises in connection with income taxable otherwise than under Schedule A or Schedule D, or

(iii) it relates to a source income from which is taxable otherwise than under Schedule A or Schedule D [or

(c) affecting tax charged at a rate other than the basic rate [F81 or the lower rate] on income from which tax has been deducted (otherwise than under section [203 F82 ] of the principal Act) or is treated as having been deducted, unless it is a relief from the tax so charged F83 ].

M10 (4) For the purposes of this section a relief from corporation tax or capital gains tax shall not be treated as affecting tax charged by any assessment unless the assessment is to the same tax F84 .

Textual Amendments

F74 S. 91(1A)(1B) inserted (23.7.1987 with effect with respect to accounting periods ending after 30.9.1993) by 1987 c. 51, s. 86(5)(7); S.I. 1992/3066, art.2(2)(a).

F75 Words in s. 91(1B) inserted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para.5

F76 See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 19A para. 3as substituted by S.I. 1990 No. 2524.

F77 Amended in relation to development land tax byDevelopment Land Tax Act 1976 Sch.8 para.24and amendment repealed by1985 s.98(6)andSch.27 Part X.

F78 S. 91(2A) added (23.7.1987 with effect with respect to accounting periods ending after 30.9.1993) by 1987 c. 51, s. 86(6)(7); S.I. 1992/3066, art.2(2)(a).

F79 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 844, Sch. 29 para. 10(6). Previously “90 of the Finance (No. 2) Act 1987”

F80 Words omitted repealed for1973—74et seq. byFinance Act 1971 ss.37, 38, Sch.6 para.88andSch.14 Part II.

F81 Words in s. 91(3)(c) inserted (16.7.1992 for the year 1992-93 and subsequent years of assessment) by Finance (No. 2) Act 1992 (c. 48), s. 19(2)(7)

F82 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F83 Finance Act 1971 ss.37, 38andSch.6 para.88with effect for1973—74et seq.

F84 See—Taxes Management Act 1970 (c. 9, SIF 63:1) s.109—application ofs.91in relation to tax underFinance Act 1970 ss.286, 288and289.Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s.306—s.91not to apply to business expansion scheme relief.

Marginal Citations

M9 1969

Sch.XX 1(1).

M10 1969

Sch.XX 14(4).

91A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F85 U.K.

Textual Amendments

F85 A development land tax provision added byDevelopment Land Tax Act 1976 (c. 24) Sch.8 para.25 Development Land Tax Act 1976repealed byFinance Act 1985 s.98(6)andSch.27 Part X.

92 Remission in certain cases of interest on tax in arrear by reason of exchange restrictions. [1952 s.497; 1965 Sch.X 1(1), Sch.XV 8.] U.K.

(1) The provisions of this section shall have effect where the Board are satisfied as respects any tax carrying interest under section 86 F86 of this Act—

(a) that the tax is in respect of income or chargeable gains arising in a country outside the United Kingdom, and

(b) that, as the result of action of the government of that country, it is impossible for the income or gains to be remitted to the United Kingdom, and

(c) that having regard to the matters aforesaid and to all the other circumstances of the case it is reasonable that the tax should for the time being remain uncollected,

and the Board allow the tax to remain uncollected accordingly.

(2) Interest on the said tax shall, subject to subsection (3) below, cease to run under the said section 86 F86 as from the date on which the Board were first in possession of the information necessary to enable them to be satisfied as aforesaid and, if the said date is not later than three months from the time when the tax became due and payable, the interest thereon under the said section 86 F86 in respect of the period before the said date shall be remitted.

(3) Where, under subsection (2) above, interest has ceased to run on any tax and thereafter demand is made by the collector or other proper officer for payment of all or any of that tax, interest under the said section 86 F86 shall again begin to run from the date of the demand in respect of the amount demanded:

Provided that where all or any part of the amount demanded is paid not later than three months from the date of the demand, the interest under the said section 86 F86 on the amount so paid running from the date of the demand shall be remitted.

Textual Amendments

F86 See—Finance (No. 2) Act 1987 s. 86(3)—references to s. 86 include reference to Taxes Management Act 1970 (c. 9, SIF 63:1) s. 87Afor accounting periods ending after a day to be appointed.Finance Act 1988 (c. 39, SIF 63:1,2) Sch. 5 para. 10(2)—reference to s. 86 to include a reference to Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 5 para. 3(4)—interest on underwriters liabilities.