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This consultation presents options for aligning rules and rates for interest across the main taxes, Income Tax Self-Assessment (ITSA), Corporation Tax (CT), and VAT. This includes aligning the high level rules for interest on VAT debt bringing them into line with ITSA and CT. The consultation also explores how late payment penalties could work and interact with interest.
The government is proposing a new hybrid model that accounts for comments from previous consultations for late payment penalties and combines a ‘penalty charge element’ together with an ‘interest’ type calculation.
The government has also published the summary of responses to the recent consultation on late submission sanctions and it is intended to take forward both elements as a coherent package. These consultations form part of the government’s work to align and simplify the tax administration framework.