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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
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Interest: interest on late payments: cut-off date

For certain assessments prior to the introduction of Self Assessment a “cut-off” date was applied in the calculation of interest following an appeal. This included Schedules A and D, Capital Gains Tax, IT-Taxed Income and Corporation Tax assessments.

In order to limit the time an appeal may be kept open without interest running, Section 86 (4) TMA 1970 and Section 101 FA 2009 impose a date from which interest will run on any amounts under appeal which become due and payable after that date.

Most assessments to which Section 55 TMA 1970 applies have a cut-off date. Normally the cut-off date is 6 months after the statutory or Earliest Due Date (EDD). However there are exceptions which are set out below.

Schedules A and D

For Schedules A and D assessments the cut-off date is the 1st July next following the end of the year of assessment. For example for a Schedule D assessment for the year 1993/94 due in two instalments on 1st January 1994 and 1st July 1994 the cut-off date would be the 1st July 1994. On any tax and Class 4 NIC stood over following an appeal that is later released for collection, the interest will accrue from the 1st July 1995.

Capital Gains Tax and IT-Taxed Income

Years to and including 1979/80

For Capital Gains Tax and IT-Taxed Income assessments for the years up to and including 1979/80 the cut-off date is the 1st January following the end of the year of assessment. For example for an assessment for the year 1978/79 the cut-off date would be the 1st January 1980. On any tax stood over following an appeal that is later released for collection, the interest will accrue from the 1st January 1980.

Years from and including 1980/81

For Capital Gains Tax and IT-Taxed Income assessments for the years from and including 1980/81 the cut-off date is the 1st June following the 1st December after the end of the year of assessment. For example for an assessment for the year 1991/92 due on 1st December 1992 the cut-off date would be the 1st June 1993. On any tax stood over following an appeal that is later released for collection, the interest will accrue from the 1st June 1993.

Corporation Tax

For Corporation Tax assessments the cut-off date is six months after the Earliest Due Date (EDD) which is normally nine months and one day after the company’s accounting period. For example for an assessment for the accounting period ended 30 September 1989 the EDD is the 1 July 1990 and the cut-off date would be the 1st January 1991. On any tax stood over following an appeal that is later released for collection, the interest will accrue from the 1st January 1991.

Table of exceptions to normal cut-off date

Assessment under Cut-off dates
   
Section 286 and 288 ICTA 1970 (Years to 1972/73)  

and

Section 289 ICTA 1970

(Years to 1973/74)

  No cut-off date. The interest date is the due and payable date.  
  Section 252 ICTA 1988 1 July following the end of the year of assessment. If the assessment shows a “period ended”, the year of assessment is that in which the accounting period ends.
  Section 375 ICTA 1988 1 June following the 1 December after the end of assessment.
  Schedule 14 Para 6 ICTA 1988 1 June following the 1 December after the end of assessment.
  Section 478 ICTA 1988 6 months following the last day on which the tax could have been paid within the time limit imposed by sub section (2)(a) of that Section.
  Section 286 ICTA 1970 (Years from 6 April 1973)  

and

Section 419 ICTA 1988 (for accounting periods ending before 1 October 1993 only)

  1 July in the year following the end of the financial way in which the loan was made.