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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
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Interest: Late payment interest: Special provisions: Effect of interest on reliefs: Relief by repayment

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.

If a person has paid an amount of income tax or capital gains tax for a period, and relief is later given to them by repaying that tax, then that person can require the amount repaid to be treated as if it were a discharge, as in CH145040, of a ‘qualifying charge to tax’.

A ‘qualifying charge to tax’ is any amount of tax charged on a person (whether alone or together with other persons) by or by virtue of any assessment for or relating to a period where income tax or capital gains tax has been paid for a chargeable period.

A special provision says that we will adjust the amount of late payment interest as though the tax refunded had never been charged.

The repayment cannot be treated as a discharge of any assessment made after the relief was given, or as reducing, without reducing to nil, the tax charged in more than one assessment.

See CH145100 for an example.