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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
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Supporting Guidance: employer compliance: guidance by subject: settlement: interest

Interest should only be included in Employer Compliance settlements for 1992-93 and later years. See COG908150 - Whether to charge interest.

From April 2014, see COG904270 for details of when to charge interest where Real Time Information (RTI) inaccuracies are included in an Employer Compliance settlement.

Note: In cases where it is intended to apply extended time limits by issuing Regulation 80 determinations, interest is chargeable by virtue of paragraph 20, Schedule 1 of the Income Tax (Pay As You Earn) Regulations 2003, see COG915220 - Time Limits for Recovery - Normal and Extended.

This provides for

  • interest accruing from 19 April 1988 for a tax year ending on or before 5 April 1988, and
  • interest accruing from the 14th day after the end of the tax year ending after 5 April 1988 but on or before 5 April 1992
  • 17 days after the end of the tax year, if the payment is made using an approved method of electronic communications.

You should remember that

  • interest is a statutory charge and, as such, cannot be negotiated
  • interest is not a penalty.

It is

  • intended to recompense the Exchequer where payment is delayed and
  • a means of maintaining equity between those employers who pay on time and those who do not.

The Regulations covering interest are

For PAYE

Regulations 82 and 84 of the Income Tax (Pay As You Earn) Regulations 2003.

For CIS and IT-SC

Regulations 16 and 17 - the Income Tax (Subcontractors in the Construction Industry) Regulations 1993.

Regulation 14 of the Income Tax (CIS) Regulations 2005.

For Class 1 NIC

Paragraph 17 Schedule 4 of the Social Security (Contributions) Regulations 2001.

For Class 1A NIC

Regulation 76 of the Social Security (Contributions) Regulations 2001.

Simplified Schemes

Certain ‘simplified schemes’ (PAYE20085 onwards) are exempt or partly exempt from interest either by statute or by concession. For example

  • In Taxes Award Scheme (TAS) cases interest is not due on the tax paid voluntarily but interest is due with effect from 2001-2002, on Class 1A NIC payable by the “third party” on awards provided to other employers’ employees.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000) COG904770.(This content has been withheld because of exemptions in the Freedom of Information Act 2000)