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HMRC internal manual

Debt Management and Banking Manual

Interest: Interest Review Unit (IRU): Miscellaneous taxes and duties: Local Authorities: Income Tax deducted from payments made

The authority should send details of any ‘Section 349 ICTA 1988’ liability as soon as possible following the end of the tax year to 5 April. An assessment should then be made under ‘Section 350 ICTA 1988’. If the information has not been provided within a reasonable period, an estimated assessment should be made.

Assessments under ‘S350’ issued after 31 January 2001 for 1999-00 and later years, carry interest under ‘S86 TMA70’ where the payment of income tax is made after 31 January following the end of the year of assessment. ‘S350’ assessments for the years 1998-99 and earlier sent at any time, and assessments for 1999-00 and 2000-01 sent on or before 31 January 2001, do not carry ‘S86’ interest.

For years ending on or after 5 April 2007 section 350 ICTA 1988 does not apply, being replaced by Section 963 Income Tax Acts 2007. Interest remains chargeable from the 31 January following the end of the year of assessment.

An objection may be made where the interest charging date is questioned. If an incorrect date has been used, arrange for the interest to be recalculated, and the excess interest cancelled or additional interest added to the existing charge.