§ Mr. LlwydTo ask the Chancellor of the Exchequer what regulations permit the Inland Revenue to impose interest charges on money requested from taxpayers in respect of time taken by the Inland Revenue to respond to queries about the calculation of the assessment; if he will make it his policy to review the effect of this practice on the Inland Revenue response times; and if he will make a statement. [28659]
§ Mr. Jack[holding answer 13 May 1996]: Interest is chargeable on overdue tax under a number of statutory provisions, depending on the particular head of tax. The main provisions are sections 86, 87 and 87A of the Taxes Management Act 1970, which charge interest on overdue income tax, capital gains tax and corporation tax, and the pay-as-you-earn regulations, which provide for interest on overdue PAYE tax. The rules for charging interest are designed to encourage prompt payment and to neutralise the advantage late payers have over those who pay promptly, while aiming to recompense the Exchequer for the loss of taxes paid later than the due dates laid down by Parliament.
The Inland Revenue aims to reply to inquiries about assessments within 28 days, but there may be good reason why it cannot meet this target. However, if there is a long delay by the Department, for which there is no good 450W reason, it will give up interest on tax that was unpaid during the period of the delay. The Inland Revenue publishes the rules on this in its code of practice on mistakes.