In one area (IHT), I was following an 'alert' that HMRC had increased the interest rate levied on late payments to 3.5% ... and noticed that they hadn't changed the interest rate payable alongside any re-payments (it remains 0.5%)!
So I looked up the history of these rates at https://www.gov.uk/government/publications/rates-and-allowances-inherita... and was stunned (it happens to me all too often nowadays) to discover that everything changed radically back in March 2009.
Prior to that date the two types of rate remained in sync (whether 1% or 11% or something inbetween) ... which is how I remember things (i.e. it wasn't part of HMRC's remit to make 'a turn' on any overdue payments vs re-payments). But someone got greedy (Alastair Darling presumably) - and no-one has tackled the fiscal drag effect since then.
To save me more fruitless research, does anyone know what the equivalent position is (re rates for overdue payments and re-payments) in other areas - such as CGT, IT, etc?
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The rates approximate to commercial rates (although clearly borrowing rates do vary considerably). To the extent that they deter people from seeing HMRC as a bank, I think a spread is appropriate.
I stand by my point that those who borrow from or lend to HMRC should pay/earn something like a commercial rate. If commercial rates rise such that 11% is a fair approximation to that, then yes, those who pay late should be charged that rate.
In the old old days before penalties for late VAT filings and payments, there were those who used VAT liabilities as an easy low cost source of borrowings.
They will also say the higher rate covers their costs in connection with reminding and collecting.
To be precise, it's the treasury that set the interest rate and who receives the revenue.
https://www.gov.uk/government/publications/rates-and-allowances-hmrc-int...
But that page has more information. Including how the rate is set and also hints they're different to match what happens with other tax authorities and also in the commercial sector. In other words, banks pay paltry amounts on savings but can charge significantly more on borrowing.
Looking at an old Whillans re IT, CGT and NI,
6/2/996 to 30/1/97 prescribed rate 6.25%, repayment supplement 6.25% 6/2/96-5/2/97.
Then it splits:
31/1/97-5/8/97 Prescribed Rate 8.5%, Repayment supplement 6/2/97-5/8/97 4%
So Darling is innocent, this must have been John Major's Chancellor (who on earth was he, not very memorable as I cannot recall who he was)
So Darling is innocent, this must have been John Major's Chancellor (who on earth was he, not very memorable as I cannot recall who he was)
Au contraire... very memorable indeed... it was Ken Clarke! That could, however, explain everything!
My memory is going, I had erroneously remembered pint drinking Ken as one of Thatcher's vegetables.
One my doctor clients keerps raving about 1988 and how Ken clarke did not listen and started to commercialise the NHS - so yes he was one of maggies creeps - the one weraring Hush puppies
One my doctor clients keerps raving about 1988 and how Ken clarke did not listen and started to commercialise the NHS - so yes he was one of maggies creeps - the one weraring Hush puppies
There's always been a bias in favour of the Government. Repayment supplement always started later that interest on late paid tax.
But, back in the day, you could get some very decent wedges of interest from FA78, s30 claims (early years losses).
Ah - those were the days!
I suspect part of reasoning was probably that the rates of interest paid to savers by banks had fallen to that sort of level and HMRC needn't pay more to people than they would get if the funds were held in their own deposit accounts.
However, there are other ways that people can put their money to work. What's more, for many, funds held by HMRC are funds which people cannot used to reduce the amounts they are actually borrowing from the banks at the far higher borrowing rates.
In the current situation, money sat on by HMRC is dropping in value by c. 10% per annum whilst people are denied the opportunity to use it or invest it to shelter it from inflation.
"banks or reduced rates", how did they do that, could it be because of the taxpayer's largesse in allowing the provision of funds at near zero cost by the BoE to the commercial banks, that "provision" is nothing more than a collosal dilution of the venerable "Pound in your pocket", just kicking the can down the road.