The tax treatment of Hong Kong pensions received by UK residents is governed by the UK’s normal domestic rules for relieving double taxation. Where the amount of Hong Kong tax was reduced, there was a corresponding increase in the UK tax payable.
Where tax is paid late, the law requires the taxpayer to pay interest. Interest is not in any sense a penalty. It is designed to recompense the Exchequer on a broadly commercial basis for the loss of the use of the tax paid late. There is no discretion over whether it is charged.