Part I Customs and Excise and Value Added Tax
C1Chapter II Value Added Tax
Interest, surcharges and supplements
P118 Interest on tax etc. recovered or recoverable by assessment.
1
Subject to section 21(6) below, where an assessment is made under any provision of paragraph 4 of Schedule 7 to the principal Act and, in the case of an assessment under subparagraph (1) of that paragraph, at least one of the following conditions is fulfilled, namely,—
a
the assessment relates to a prescribed accounting period in respect of which either—
i
a return has previously been made, or
ii
an earlier assessment has already been notified to the person concerned,
b
the assessment relates to a prescribed accounting period which exceeds three months and begins on the date with effect from which the person concerned was, or was required to be, registered,
c
the F3whole of the amount assessed shall carry interest at the prescribed rate from the reckonable date until payment.
2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4
3
F5In any case where—
a
the circumstances are such that an assessment falling within subsection (1) above could have been made, but
b
before such an assessment was made the tax due or other amount concerned was paid (so that no such assessment was necessary),
F6the whole of the amount paid shall carry interest at the prescribed rate from the reckonable date until the date on which it was paid.
4
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F7
6
Where an unauthorised person, as defined in section 15(2) above, issues an invoice showing an amount as being tax or as including an amount attributable to tax, the amount which is shown as tax or, as the case may be, is to be taken as representing tax shall carry interest at the prescribed rate from the date of the invoice until payment.
7
The references in subsections F8(1) and (3) above to the reckonable date shall be construed as follows—
a
where the amount assessed or paid is such an amount as is referred to in subparagraph (2)(a) or subparagraph (2)(b) of paragraph 4 of Schedule 7 to the principal Act (incorrect repayment of tax or payment in respect of excess credit), the reckonable date is the seventh day after the day on which a written instruction was issued by the Commissioners directing the making of the payment of the amount which ought not to have been repaid or paid to the person concerned; and
b
in all other cases the reckonable date is the latest date on which (in accordance with regulations under the principal Act) a return is required to be made for the prescribed accounting period to which the amount assessed or paid relates; and
c
in the case of an amount assessed under paragraph 4(6) of Schedule 7 to the principal Act (assessments in respect of goods which cannot be accounted for) the sum assessed shall be taken for the purposes of paragraph (b) above to relate to the period for which the assessment was made;
and interest under this section shall run from the reckonable date even if that date is a nonbusiness day, within the meaning of section 92 of the M1Bills of Exchange Act 1882.
P28
In this section “the prescribed rate” means such rate as may be prescribed by order made by the Treasury; and such an order—
a
may prescribe different rates for different purposes;
b
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; and
c
shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament.
9
Interest under this section shall be paid without any deduction of income tax.
C210
This section shall come into operation on such day as the Treasury may by order made by statutory instrument appoint and any reference in this section to a prescribed accounting period is a reference to a period which begins on or after the day so appointed.
Pt. I Chapter II (ss. 11-13) modified by Finance Act 1988 (c. 39, SIF 40:2), s. 21(a)