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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 - examples

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.

Example 1 - one late payment

Bela is required to pay £10,000 on 31 January 2013. She pays £10,000 on 5 March 2013.

Late payment interest runs from the late payment interest start date of 31 January 2013 to the late payment interest end date of 5 March 2013.

Bela will be charged late payment interest on £10,000 for 33 days. We calculate the number of days following the guidance at CH140220.

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Example 2 - late payment paid in instalments

Kevin is also required to pay £10,000 on 31 January 2013. He cannot pay the full amount on the due date. He pays £5,000 on 31 January 2013, £2,000 on 1 May 2013 and £3,000 on 24 May 2013.

The £5,000 is not late so no late payment interest applies to that payment.

The late payment interest start date for each late payment is 31 January 2013. The late payment interest end date is the date of each payment, which is 1 May 2013 for £2,000 and 24 May 2013 for £3,000.

We charge late payment interest as follows.

Period for which interest is charged Number of days Amount on which interest is charged
     
31 January 2013 - 1 May 2013 90 £2,000
31 January 2013 - 24 May 2013 113 £3,000