CCM10390 - Penalties and Interest

Interest

HMRC, in common with most other organisations and businesses, charges interest when it receives monies late. Interest is not intended to be a penalty, it is commercial restitution for the Exchequer being denied the use of the monies. In most areas of HMRC business the charging of interest does not require default, if monies are paid late then interest is charged regardless of why the payment has been delayed. However, for tax credits, interest is only chargeable where there has been fraud or neglect.

You will encounter interest in two situations:

• interest on penalties
• interest on overpaid tax credits.

You can find the current rate of interest on the Intranet, from the home page click on Library and then on Lists & Tables and then Interest Rates. Alternatively you can enter 'Interest Rates' in Local Search or use the A-Z index. The rate for overpaid tax credits is the same as the rate for Income Tax Self Assessment.