Interest on late payment of tax

A4.620 General

For the latest New Developments, see ND.1749, ND.1763, ND.1903, ND.1946.

TMA 1970, s 86 provides for interest to be charged where payment of tax is delayed, although the application is being replaced, in stages, by new provisions1 (see below for more detail on the FA 2009 changes to the interest regime). Where the taxpayer has entered into a time to pay arrangement with HMRC and all the payments due under that arrangement are made on time, interest will be charged on late payment of the tax debt, but the surcharge would not be imposed (see A4.609).

HMRC do not have any general power to mitigate interest, as they have for penalties, but there are specific circumstances under which an interest charge may be reduced:


    •     financial redress in the form of a waiver of statutory interest on unpaid tax may be considered in a complaint case (see A6.802), and


    •     where tax is deferred in response to a disaster of national significance, no interest is charged on the amount of tax deferred, subject to certain criteria (see below)

In N & Mrs S Gretton (No 2)'s, the Upper Tribunal held that the First-tier Tribunal had no discretion or jurisdiction to determine that interest should not be payable2. Applications for judicial review of interest charges were dismissed in IRC (ex p Barker & Beresford)3 and Oyston's4.


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