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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Interest: Late Payment Interest: General rule

You must check whether, and from which date, the FA 2009 interest rules apply to the tax or duty you are dealing with. See CH140160 for full details.

When you are considering late payment interest you must look first at the general rule and then at any special provisions that apply to your particular case.

General rule for late payment interest

Interest on amounts paid late runs from the late payment interest start date until the late payment interest end date.

For most late payments, the late payment interest start date is the due date for payment of the amount concerned, even if the start date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882.

The late payment interest end date is the day on which payment is made. A credit or overpayment that has been used to pay an amount that is due and payable is considered a payment for the purposes of calculating interest. We treat the payment as made on the date when the set-off takes effect.

Late payment interest continues to be charged on the reduced balance when amounts are not paid in full. Where an amount is paid in instalments, late payment interest continues to be charged on outstanding amounts.

When counting the number of days for which a person is liable to late payment interest, you count the days from the late payment interest start date until the late payment interest end date. This means that an amount that is due and payable on 31 January 2013 (late payment interest start date) and paid on 1 February 2013 (late payment interest end date) attracts 1 day of late payment interest.

See CH140200 for examples of counting the number of days and CH141140 for examples of the general rule for late payment interest.

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Special provisions

In particular circumstances, there are special provisions that change

  • the late payment interest start date,
  • the amount on which late payment interest is charged, and
  • the amount of late payment interest in relation to reliefs.

The guidance for special provisions is at CH142000+ and there is a summary of the special provisions at CH149930.

FA09/S101

FA09/SCH53