Statement of Practice 6 (1989)
Published 31 July 1989
© Crown copyright 1989
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1. Where an assessment has been made late or is inadequate because there has been a delay in making a tax return, interest is payable (under Taxes Management Act (TMA) 1970 s 88) on unpaid tax from the date on which the tax should have been paid. The Commissioners for HM Revenue and Customs (HMRC), however, have specific discretion under TMA 1970 s 88 to mitigate that interest charge. On 10 May 1977, the Board drew attention - by way of a press notice - to the department’s practice of claiming such interest where the delay was ‘substantial’.
2. Enquiries have been received as to what degree of delay is regarded as ‘substantial’, particularly in relation to returns by individuals of their capital gains.
3. In respect of (i) new sources of income, (ii) continuing sources where inadequate estimated assessments are not appealed against or (iii) chargeable gains, the delay is regarded as ‘substantial’, and consideration will be given to charging interest under TMA 1970 s 88, if the relevant tax return has not been made within 30 days of the date on which it was issued or, if later, by 31 October following the end of the tax year in which the income or chargeable gain arose.
4. Where it is not possible to lodge the return, a s 88 charge will not be raised if the inspector is provided, within these time limits, with sufficient information to enable an adequate estimated assessment to be made - eg, in the case of the disposal of a chargeable asset, at least the sale price of that asset.
5. Section 88 has been repealed for 1996 to 1997 and subsequent years of assessment (1997 to 1998 and subsequent years for partnerships set up before 6 April 1994), and also for 1995 to 1996 and earlier years where an assessment is made on or after 6 April 1998. This Statement of Practice only applies to assessments where s 88 does apply.
Press releases
Tax Bulletin May 1993 (Circumstances in which HMRC may seek to charge interest under TMA 1970 s 88 instead of under s 86 (not reproduced)).
Note: this statement supersedes Statement of Practice 3 (1988) for failures occurring after 26 July 1989.
The text of this statement is as it appears in IR 131 (January 2000).