This guidance reflects the provisions in Part 6 of the Tax Collection and Management (Wales) Act 2016 (‘TCMA’) (Chapters 1 – 7).
Contents
The guidance covers interest on late payment of tax and penalties and repayment of tax by the Welsh Revenue Authority (WRA).
TCMA/4010 Late payment interest
The WRA will charge interest on any amount of unpaid tax, commencing from the late payment interest start date and ending on the date it is paid.
The late payment interest start date for particular amounts of tax is stated in the following table:
| Amount of tax unpaid | Late payment interest start date |
|---|---|
| Amount stated in a tax return | Day after the filing date for the tax return |
| Amount stated in a return amended by the taxpayer (s41 TCMA) | Day after the filing date for the tax return |
| Amount stated in a WRA correction notice (s42 TCMA) | Day after the filing date for the tax return |
| Amount stated in an amendment to a return made by the WRA (s45 or s50 TCMA) | Day after the filing date for the tax return |
| Amount stated in a WRA assessment (s54 or s55 TCMA) | Day after the filing date for the tax return |
| Amount stated in a WRA determination (s52 TCMA) | Day after the filing date when the return was required to be made |
| Amount stated in a WRA assessment where no tax return (s54 or s55 TCMA) | Day after the filing date when the return was required to be made |
The late payment interest start date may be a non-business day. The date of payment includes the date on which the amount is set off against another amount payable by the WRA.
The interest charged is simple interest, not compound interest. This means that late payment interest is only calculated on the amount of unpaid tax and not on late payment interest that has already been charged or accrued. The Tax Collection and Management (Administration) (Wales) Regulations 2018 set out the late payment interest rates. The percentage per annum interest rate charged for late payment of tax is the Bank of England rate +2.5%.
When an amount is paid to the WRA, it must issue a receipt if requested.
If a taxpayer dies before an amount becomes due and payable, and the executor of the deceased taxpayer is unable to pay the amount before obtaining probate or letters of administration, the late payment interest start date is the later of:
- the date the late payment interest would have started if the taxpayer had not died, and
- the day after the end of the period of 30 days beginning with the grant of probate or letters of administration.
TCMA/4020 Late payment interest on penalties
The WRA will charge interest on an amount of unpaid penalty from the date on which the penalty was due to be paid until is the day it is paid (this includes non-business days. See TCMA/3040 for more information on penalty due dates.
‘Unpaid penalty’ means a penalty which has not been paid in full by the due date.
The percentage per annum interest rate charged for late payment of a penalty is the percentage per annum figure of the Bank of England rate + 2.5%.
TCMA/4030 Repayment interest
The WRA will pay interest on any repayment of:
- tax
- penalties, and
- interest (which the taxpayer may have had to previously pay on the tax or penalties).
In all cases, any repayment must relate to amount of devolved taxes or penalties; the WRA will not repay any amounts that were paid to the WRA in error.
Repayment interest starts on:
- the date that the payment was made by the taxpayer, or
- the date on which the amount became payable to WRA
whichever is later.
The start date may be a non-business day.
Repayment interest ends on the date the repayment is made by the WRA.
The Tax Collection and Management (Administration) (Wales) Regulations 2018 set out the late repayment interest rates. The percentage interest rate applied is the higher of:
- 0.5% per annum, or
- the Bank of England rate.
The interest paid is simple interest, not compound interest. This means that repayment interest is only calculated on the amount of tax, penalties or interest (on tax or penalties) which is being repaid, and not on repayment interest that has already been accrued.