# IHTM31616 - The assessment: IOP(WIR)

In an assessment for instalments with interest relief ( IHTM30363), if a repayment of interest is due in respect of interest charged on additional tax the same principles for IOP ( IHTM31615) apply for each previous interest charge on each previous assessment.

Example

 (Due date 30 June 00) Total tax on IOP Tax Due Interest 1. On 30 June 00 an assessment for the first instalment of tax on the IOP(WIR) is issued 10,000 1,000 NIL 2. On 30 June 01 an assessment for the second instalment is issued. The total tax on the IOP has increased to £15,000 so the tax due is 2/10 ( 15,000 = 3,000 less already assessed (1,000) = 2,000. No interest is due on this instalment or on the unpaid tax but interest is due under "adjustment" on that part of the increase in tax, namely 1/10 (R - P) (15,000 - 10,000) = £500 which related to the first instalment from 1 July 00 to 30 June 01 15,000 2,000 24.17 3a On 30 June 02 an assessment for the third instalment is prepared. The total tax on IOP is reduced to 12,000. So the tax now due is 3/10 ( 12,000 = 3,600 less already assessed (3,000) = 600. No interest is payable on this instalment or on the unpaid tax but interest is repayable on that part of the decrease in tax, namely 1/10 (P - R) (15,000 -12,000) = £300 which relates to the previous instalments. i) 1st instalment: Interest of £24.17 was charged on the additional tax of £500. The decrease in tax is now £300 (see above) so the interest repayable is 300 ( 24.17 = 14.50 500 ii) 2nd instalment: No interest has been charged on this instalment so no interest is repayable 12,000 600 -14.50 3b In this situation interest credit (see paragraph number 3b of the preceding example ( IHTM31615)) is allowed as before (the dates being the same): (on £14.50 from 15 Aug 01 to 30 June 02) -0.41 Total assessment on 30 June 02 600 -14.91