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Taxation (Interest Charges)

Volume 13: debated on Friday 27 November 1981

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asked the Chancellor of the Exchequer what is the practice of the Inland Revenue in regard to interest chargeable on overdue payments of tax made to them during the Civil Service strike; whether interest will be charged up to the day on which payment was intended to be made rather than on the basis of the later date when the payment was dealt with by revenue officials; whether it will be the practice to waive charges in cases of doubt; what is the statutory authority under which interest is charged on tax owed; and if he will summarise the advice given to tax officers in the application of this statutory authority.

Interest is chargeable on tax, other than PAYE tax, under sections 86–88 Taxes Management Act 1970. Section 51 of the Finance Act 1981, however, enables businesses which, because of the recent Civil Service industrial action were owed amounts from Government Departments, to claim exemption from interest to the extent that such amounts exceeded their (non-interest bearing) PAYE tax and NIC. For the purpose of charging interest on tax paid by cheque during the industrial action the date of payment will normally be taken as the date on which the cheque was posted or was handed to the Revenue.