§ Mr. Carmichaelasked the Chancellor of the Exchequer whether he will introduce legislation to clarify the position 362W about the interest charge intended to be imposed by Schedule 12 to the Finance Act 1965, on companies which fail to pay over to the Inland Revenue by the due date Income Tax deducted from distributions and annual payments.
§ Mr. CallaghanI have had this matter under consideration. Legal advice which the Inland Revenue have received suggests that the interest provision in Schedule 12 does not wholly achieve its purpose, and that, while the Inland Revenue could claim interest in most cases of delay or default, they could not do so in cases where the company makes a return by the due date but fails to pay the tax. Clearly we will need to rectify this, and I will bring forward legislation in the next Finance Bill to ensure that interest will run in all cases of delay or default with effect from the due date for payment, i.e. the 19th of the relevant month. In fairness to those companies who pay promptly, I propose that the new provision should apply with effect from this month's due date, i.e. 19th November. And in all the circumstances I am instructing the Inland Revenue not to pursue interest charges on arrears of Schedule 12 tax for the period up to 19th November and where interest for that period has been paid already they will arrange to refund it.