Interest harmonisation
The measure
Corporation tax and petroleum revenue tax (PRT) are to be brought into the harmonised interest regime introduced by FA 2009.
In the harmonised regime, interest on late paid tax will be charged by HMRC from the date the tax is due to be paid and interest on tax repayments will accrue from the date of payment of tax or, if later, the date it is due to be paid.
The rules relating to interest on corporation tax quarterly instalment payments will remain outside the harmonised rules, reflecting the particular nature of these payments.
Who will be affected?
Taxpayers making late payments of corporation tax or PRT, or receiving repayments from HMRC.
When?
The new provisions will be brought into effect by Treasury Orders, which will specify the dates from which they are effective. Interest harmonisation is expected to be phased in over a number of years.
Until recently there were a number of different rules applying to interest across taxes and duties. The single legislative framework for interest should make it easier for taxpayers to understand how their interest is calculated.
It is also satisfying that the Government has responded to the representations made during the consultation process to exclude interest on corporation tax quarterly instalment payments from the harmonised regime.
