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Interest on late paid Income Tax

Effective Date of Payment for a tax refund which has been offset

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2017/18 Tax Return filed late (17 April 2019) showing a liability of £3K

2018/19 Tax Return filed on 24 May 2019 showing a refund of £3.3K.   Said refund has been offset against above liability.

I was expecting HMRC to charge interest on the 17/18 liability from 31 January 2019 until 23 May 2019, but instead they have done so up to 30 January 2020.   HMRC advise that this is because the effective date of payment for the refund is 31 January 2020, rather than the date the 18/19 Return is filed.

This seems grossly unfair as for 8 months or so they are charging interest on a debt that physically does not exist.    But I cannot find anywhere within the Self-Assessment or Debt Management manuals which suggest either of us is correct.

Any thoughts?

 

Replies (4)

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By Wanderer
13th Jun 2019 16:57

This has come up before and the conclusion was HMRC are right.

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By Not Anonymous
13th Jun 2019 17:00

How about SAM110220

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Replying to Not Anonymous:
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By Wanderer
13th Jun 2019 17:06

Good find! I remember reading the legislation last time and came to the conclusion that HMRC was (unfairly) correct.

OP haven't read it though but the concession in Not Anonymous' link may apply:-

HMRC wrote:
In these cases, as a concession the EDP of the BCC should be amended to the date the return was received (logged) if this is earlier than the filing date. This applies to all BCC’s irrespective of the income source from which the overpayment originates.
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Replying to Not Anonymous:
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By Swedish Chef
13th Jun 2019 17:15

Not Anonymous wrote:

How about SAM110220

BINGO! Yes, that's the one.

Call subsequently put into HMRC who will refer on to review.

Thanks for your help.

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