A4.620 Interest on late payment of tax—overview
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 provisions that are to be applied to all taxes and duties (see 'Harmonised interest regime' below).
Note that 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 A4.610.
HMRC does not have any general power to mitigate interest, as it has for penalties, but there are specific circumstances under which an interest charge may be reduced:
(a) 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
(b) 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 'Events designated as national disasters' below)
In relation to (a), HMRC can only give up interest where its mistake or unreasonable delay caused the build up of the interest. Unlike late filing and late payment penalties, reasonable excuse is not a consideration when dealing with interest objections.1
In Gretton (No 2)2, the Upper Tribunal held that the First-tier Tribunal had no discretion or jurisdiction to determine that interest should not be