Taxes Management Act 1970

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 F1 ] 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 F2 ] 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 F2 ] (advance corporation tax) F3 F4 .

[F5 (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) subject to subsection (3A) 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) 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— F6 ] F7 .

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 F8 ] 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. Tax charged by an assessment to income tax under Schedule C or an assessment to income tax under Schedule D made under Part III of Schedule [3 F8 ] to the principal Act.	2. The last day of the six months following the end of the thirty days mentioned in paragraph 9 of the said Schedule [3 F8 ].
3. Tax charged by an assessment charging income tax as mentioned in subsection (2)(b) above F9 .	3. [The 1st June following the 1st December mentioned in section [5(4) F10 ] of the principal Act F11 .]
4. Tax charged by an assessment to capital gains tax.	4. [The 1st June following the 1st December mentioned in section 7 of the Capital Gains Tax Act 1979 F11 .]
5. Tax charged by an assessment to corporation tax other than an assessment made under Schedule [13 to the principal Act F10 ].	5. The last day of the six months following—
	(a) in a case where section [10(1) F10 ] of the principal Act applies, the end of the nine months there mentioned F12 ;
	(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 relatesF13 ; or
	(c) in a case where section [478 F10 ] of that Act applies, the last day on which the tax could have been paid within the time limit F14 imposed by subsection (2)(a) of that section. F15

(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 F16 ], that interest may, if the Board think fit, be remitted F17 ] F18 F19 .

Textual Amendments

F1 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.

F2 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F3 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).

F4 See—Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 375—assessements under subsection (3)to be regarded as if included among those specified in s. 86(2).Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 14 para. 6(2)(a)—assessments under para. 6to be regarded as if they were included among those specified in s. 86(2).S.I. 1986 No. 1948 (in Part III Vol. 5) regn. 33(3) —assessments under S.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 63:2)to apply to assessments under S.I. 1987 No. 352 (pension scheme surpluses: administration) as if under s. 86(2)but omitting s. 86(3)and (4)and substituting a different definition of

“the reckonable date”.

F5 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))

F6 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.

F7 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).

F8 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F9 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.

F10 Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 29 para. 32.

F11 Finance Act 1980 s.61(3)in relation to tax for1980—81et seq.

F12 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).

F13 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.

F14 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.

F15 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.

F16 Finance Act 1980 s.62for interest on assessments issued after1August1980.

F17 Finance (No. 2) Act 1975 s.46(1)in relation to tax charged by assessments where notices issued after31July1975.

F18 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.

F19 See—Finance Act 1989 ss. 158and Sch. 17—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.