Taxes Management Act 1970

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 F1 ,]

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 F2 ] interest at the [rate applicable under section 178 of the Finance Act 1989 F3 ] from the date on which the tax ought to have been paid until payment F4 .

M1 (2) This section shall not apply in relation to [F5 ] tax under Schedule [13 or 16 to the principal Act F6 ].

[(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 F7 .]

M2 (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.

M3 (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) F8 ] of the principal Act, the following 1st July,

[(c) in the case of any income tax specified in section [5(4) F8 ] of the principal Act, the following [1st December F9 ] F10 ,]

M4 (d) in the case of capital gains tax, [1st December F9 ] in the year of assessment next following the year for which the tax is charged,

M5 (e) in the case of corporation tax, the date nine months from the end of the accounting period for which the tax is charged F11 F12 . . . F13

(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F14

[(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 F15 .]

(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 F16 .] F17

Textual Amendments

F1 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,”.

F2 Finance Act 1989 s. 160(1).Previously

“shall carry”.

F3 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.

F4 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.

F5 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.

F6 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.

F7 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.

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

F9 Finance Act 1980 s.61(4)for1980—81et seq.

F10 Finance Act 1971 ss.37and38andSch.6 para.87for1973—74et seq.

F11 Subs. (e)omitted by Finance (No. 2) Act 1987 s. 86(4)for accounting periods ending after a day to be appointed.

F12 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).

F13 Words repealed by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 844and Sch. 31See 1987edition for text.

F14 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.

F15 Finance (No.2) Act 1975 s.46(4)in relation to tax charged by assessments where notices issued after31July1975.

F16 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.

F17 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)

C1 S. 88 extended (25.7.1991) by Finance Act 1991 (c. 31, SIF 63:1), s. 33(3)(c)

C2 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)

C3 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)

C4 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

M1 1967 Sch.XI 10(3), 12(3).

M2 1960

s.58(7).

M3 1960

s.58(2).

M4 1969

Sch.XX 14(5).

M5 1966

Sch.VI 8(2).