Interest on tax underpaid by companies

Produced by Tolley

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Interest on tax underpaid by companies
  • When is interest charged?
  • How much interest will be charged?
  • Interest on corporation tax and quarterly instalment payments (QIPS)
  • How can the interest due be mitigated?

Interest on tax underpaid by companies

Interest on tax underpaid is a compulsory charge which essentially compensates the Exchequer for the interest that would have accrued to it had the correct amount of tax been paid on the correct date.

A harmonised regime is in place in respect of interest for the late payment of all taxes, with the exception of corporation tax (see below). The regime applies a single rate of simple interest on late payments, rather than applying a different rate to different taxes. This guidance note focuses on interest payable by companies. For details of interest payable under self assessment for individuals, such as partners and sole traders, see the Interest and penalties on late paid tax under self assessment guidance note.

When is interest charged?

The Taxes Management Act 1970 provides that tax 'shall carry interest' at the late payment rate from the late payment interest start date until the date of payment.

A charge to interest c

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