With the rate of late-payment interest to increase in April 2025 the CIOT is urging the UK Government to re-introduce rules enabling HMRC to waive interest on underpaid VAT where no actual tax loss has occurred.
The CIOT has again highlighted a deficiency in the late-payment interest regime introduced for VAT return periods starting on or after 1 January 2023 (as part of the harmonised penalties and interest regime). Where a taxpayer business under-declares VAT in circumstances where that VAT is reclaimable by a third party (e.g. the taxpayer’s customer) and no tax is lost to the Exchequer HMRC will still charge interest. Under the current regime HMRC no longer have discretion to waive the interest charge.
As the CIOT summarises: ‘interest is now being charged in situations where there is no net loss of tax. We do not understand this to be a deliberate decision on...
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With the rate of late-payment interest to increase in April 2025 the CIOT is urging the UK Government to re-introduce rules enabling HMRC to waive interest on underpaid VAT where no actual tax loss has occurred.
The CIOT has again highlighted a deficiency in the late-payment interest regime introduced for VAT return periods starting on or after 1 January 2023 (as part of the harmonised penalties and interest regime). Where a taxpayer business under-declares VAT in circumstances where that VAT is reclaimable by a third party (e.g. the taxpayer’s customer) and no tax is lost to the Exchequer HMRC will still charge interest. Under the current regime HMRC no longer have discretion to waive the interest charge.
As the CIOT summarises: ‘interest is now being charged in situations where there is no net loss of tax. We do not understand this to be a deliberate decision on...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
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