Finance Act 1989

Interest etc. U.K.

156 Interest on overdue tax. U.K.

(1) In section 86 of the M1 Taxes Management Act 1970, forsubsection (3) and the words in subsection (4) preceding the Table there shallbe substituted—

“(3) For the purposes of this section—

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

(b) subject to subsection (3A) below, the reckonable date in relation to taxcharged 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 taxcharged by the assessment is due and payable on a date later than the dategiven by the Table in subsection (4) below, the reckonable date in relationto 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 hadbeen no appeal against the assessment (assuming in a case where the tax wouldnot have been charged by the assessment if there had been no appeal that itwas so charged).

(4) The Table referred to in subsection (3A) above is asfollows—”.

(2) In section 55 of that Act—

(a) in subsection (2), for the words “it were” onwards there shall besubstituted the words “there had been no appeal.”,

(b) in subsection (6), for paragraphs (a) and (b) there shall besubstituted—

“(a) in the case of a determination made on an application under subsection (3)above, other than an application made by virtue of subsection (3A) above, thedate on which any tax the payment of which is not so postponed is due andpayable shall be determined as if the tax were charged by an assessment noticeof which was issued on the date of that determination and against which therehad been no appeal; and

(b) in the case of a determination made on an application under subsection (4)above—

(i) the date on which any tax the payment of which ceases to be so postponedis due and payable shall be determined as if the tax were charged by anassessment notice of which was issued on the date of that determination andagainst which there had been no appeal; and

(ii) any tax overpaid shall be repaid.”and

(c) for subsection (9) there shall be substituted—

“(9) On the determination of the appeal—

(a) the date on which any tax payable in accordance with that determinationis due and payable shall, so far as it is tax the payment of which had beenpostponed, or which would not have been charged by the assessment if there hadbeen no appeal, be determined as if the tax were charged by anassessment—

(i) notice of which was issued on the date on which the inspector issues tothe appellant a notice of the total amount payable in accordance with thedetermination, and

(ii) against which there had been no appeal; and

(b) any tax overpaid shall be repaid.”

(3) In section 56(9) of that Act, for the words “amount of” there shallbe substituted the words “amount charged by”.

(4) This section shall apply to tax charged by any assessment notice of whichis issued after 30th July 1982.

Marginal Citations

M1 1970 c. 9.

157 Effect of certain claims on interest. U.K.

(1) In relation to any tax charged by an assessment made under section 252(1)of the Taxes Act 1988 to recover corporation tax that becomes payable as aresult of the making of a claim under section 240 of that Act, the reckonabledate for the purposes of section 86 of the M2 Taxes ManagementAct 1970 (in this section referred to as “section 86”) is the date which is given by paragraph 5 ofthe Table in subsection (4) of that section.

(2) Subsections (3) and (4) below apply in any case where—

(a) there is in any accounting period of a company (in this section referredto as “the later period”) an amount of surplus advance corporationtax, as defined in subsection (3) of section 239 of the Taxes Act 1988, and

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

(c) if the claim under the said subsection (3) had not been made—

(i) an amount of corporation tax assessed for the earlier period would carryinterest in accordance with section 86, or

(ii) an assessment could have been made under section 252(1) of that Act torecover corporation tax for the earlier period.

(3) In determining the amount of interest payable under section 86 oncorporation tax unpaid for the earlier period, no account shall be taken ofany reduction in the amount of that tax which results from section 239(3) ofthe Taxes Act 1988 except so far as concerns interest for any time after theday following the expiry of nine months from the end of the later period.

(4) Where, but for the claim under section 239(3) of the Taxes Act 1988, anassessment could have been made under section 252(1) of that Act to recovercorporation tax for the earlier period, interest under section 86 shall bechargeable, in relation to any time not later than the day referred to insubsection (3) above, as if the claim had not been made and such an assessmenthad been made.

(5) In relation to interest charged under section 86 by virtue of subsection(4) above, section 69 of the M3 Taxes Management Act 1970shall have effect with the substitution for the words following paragraph (c)of the words “as if it were tax charged and due and payable under anassessment”.

(6) In this section—

(a) subsection (1) above shall have effect where the claim under 240 of theTaxes Act 1988 is made on or after 14th March 1989, and

(b) subsections (2) to (5) above shall have effect where the claim undersection 239(3) of that Act is made on or after that date,

but this section shall not have effect in relation to corporation tax forany accounting period ending after the day which is the appointed day for thepurposes of section 85 of the M4 Finance (No.2) Act 1987.

Marginal Citations

M2 1970 c. 9.

M3 1970 c. 9.

M4 1987 c. 51.

158 Small amounts of interest. U.K.

(1) In the Taxes Management Act 1970—

(a) section 86(6) (remission of interest payable on overdue income tax,capital gains tax or corporation tax where interest would not exceed£30), and

(b) section 87(4) (no interest payable on overdue advance corporation tax orincome tax on company payments where interest would not exceed £30),

shall cease to have effect.

(2) The words “of not less than £25” in—

(a) [F1 section 283(1) of the M5 Taxation of Chargeable Gains Act 1992] (norepayment supplement where overdue repayment of capital gains tax less than£25), and

(b) section 824(1)(a) and (b) and (5) of the Taxes Act 1988 (no repaymentsupplement where overdue repayment of income tax etc. less than £25),

and the words “of not less than £100” in section 825(2) of theTaxes Act 1988 (no repayment supplement where overdue repayment of company taxless than £100) shall cease to have effect.

(3) Paragraph (a) of subsection (1) above shall have effect—

(a) in relation to income tax under Schedule E, where the demand for the taxis made on or after the appointed day, and

(b) in any other case, where the tax is charged by an assessment notice ofwhich is issued on or after the appointed day.

(4) Paragraph (b) of that subsection shall have effect where the tax ischarged by an assessment relating to an accounting period beginning on orafter the appointed day.

(5) Subsection (2) above shall have effect in relation to repayments of taxmade on or after the appointed day.

(6) In this section “the appointed day” means such day as theTreasury may by order made by statutory instrument appoint; and different daysmay be appointed for different enactments or for different purposes of thesame enactment.

Textual Amendments

F1 Words in s. 158(2)(a) 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. 19(3) (with ss. 60, 101(1), 201(3))

Marginal Citations

M5 1975 c. 45.

159 Interest on tax in case of failure or error. U.K.

(1) Section 88 of the M6 Taxes Management Act 1970 (intereston tax recovered to make good loss due to taxpayer’s fault) shall be amendedas follows.

(2) In subsection (1), for the words “the fraud, wilful default or neglectof any person” there shall be substituted the words—

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

(b) an error in any information, return, accounts or other document deliveredto an inspector or other officer of the Board,”.

(3) The following subsection shall be added at the end—

“(7) In paragraph (a) of subsection (1) above the reference to a failure to dosomething includes, in relation to anything required to be done at aparticular time or within a particular period, a reference to a failure to doit at that time or within that period; and, accordingly, section 118(2) ofthis Act shall not apply for the purposes of that paragraph.”

(4) This section shall have effect in relation to failures occurring, anderrors in any information or documents delivered, on or after the day on whichthis Act is passed.

Marginal Citations

M6 1970 c. 9.

160 Determinations under TMA s. 88. U.K.

(1) In subsection (1) of section 88 of the Taxes Management Act 1970, for thewords “shall carry” there shall be substituted the words “shall, if aninspector or the Board so determine, carry”.

(2) The following section shall be inserted after that section—

“88A Determinations under section 88.

(1) Notice of a determination under section 88 above shall be served on theperson 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 whichthat tax was charged,

(c) the date when for the purposes of section 88 above that tax ought to havebeen 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 servedthe 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 taxcarrying the interest is charged (or, in the case of development land tax, ofthe financial year in which the liability for that tax arose), or

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

(4) An appeal may be brought against a determination under section 88 aboveand, subject to the following provisions of this section, the provisions ofthis Act relating to appeals shall have effect in relation to an appealagainst such a determination as they have effect in relation to an appealagainst 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 Commissioners 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 thedetermination, or

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

(3) In section 70 (certificates) of the M7 Taxes ManagementAct 1970, for subsection (3) there shall be substituted—

“(3) A certificate of the inspector or any other officer of the Board that ithas been determined that tax carries interest under section 88 of this Act,together with a certificate of the collector that payment of the interest hasnot been made to him, or, to the best of his knowledge and belief, to anyother collector, or to any person acting on his behalf or on behalf of anothercollector, shall be sufficient evidence—

(a) that interest is chargeable on the tax from the date when for the purposesof section 88 of this Act the tax ought to have been paid, and

(b) that the sum mentioned in the certificate is unpaid and is due to theCrown;

and any document purporting to be such a certificate as is mentioned inthis subsection shall be deemed to be such a certificate unless the contraryis proved.”

(4) In section 113 of that Act (form of documents), the following subsectionshall be inserted after subsection (1B)—

“(1C) Where an officer of the Board has decided that an amount of tax carriesinterest under section 88 of this Act and has taken the decisions needed forarriving at the date when for the purposes of that section that tax ought tohave been paid, he may entrust to any other officer of the Boardresponsibility for completing the determination procedure, whether by meansinvolving the use of a computer or otherwise, including responsibility forserving notice of the determination on the person liable to the interest.”

(5) In section 114 of that Act (want of form not to invalidate), after theword “assessment”, in each place where it occurs, there shall be insertedthe words “or determination”.

(6) In paragraph 5 of Schedule 3 to that Act (rules for assigning proceedingsto Commissioners), the following entry shall be inserted in the first columnafter the entry relating to an appeal against an assessment to capital gainstax— “ An appeal against a determination under section 88 of this Act. ”

Marginal Citations

M7 1970 c. 9.

161 Tax carrying interest under TMA ss. 86 and 88. U.K.

The following subsection shall be substituted for section 88(3) of the M8 Taxes Management Act 1970—

“(3) Where it is finally determined that any tax carries interest under thissection, the tax shall carry no interest under section 86 or 86A above (and,accordingly, any interest under either of those sections which has been paidbefore the final determination shall be set off against the amount of theinterest under this section); and for the purposes of this subsection adetermination that tax carries interest is not final until it can no longerbe varied, whether by any Commissioners on appeal or by the order of anycourt.”

Marginal Citations

M8 1970 c. 9.