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:
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 |
