BIM73165 - Farmers' averaging: postponement of payment of tax and interest

If a farmer making an averaging claim applies to postpone payment of tax for the first year covered by the claim on the grounds that the profits for the first year are higher than for the second year, you should point out that averaging does not in fact alter the tax due for the earlier year (see BIM73145).

Interest on unpaid tax and repayment supplement

The instructions in AD4900 and SAT2/14 onwards apply the generality of interest on tax. However, it is worth remembering that when an averaging claim is made the SA for the earlier year is not amended and the tax bill for it is unchanged. Relief is given in the later year.

If tax is paid late then interest will be charged under TMA1970/S86.

If averaging results in a repayment, any repayment supplement that may be due is calculated by reference to the later year. The online SA Manual chapter elaborates on this at Repayments//Issue Repayments//effective Dates of Payment.