SAM60001 – Interest, penalties and surcharge: interest: introduction
Interest is chargeable on all SA liabilities except on interest itself
- From the relevant date (RD), the date by which the liability should be paid
- To the effective date of payment (EDP) (SAM60055), the date on which the payment is regarded as received by HMRC
The SA system automatically calculates the interest payable. The taxpayer statement shows the amount of interest accrued to the date of issue. The actual interest charge will be raised automatically once the underlying liability has been paid and will also appear on the statement.
There is a de minimis limit for interest of £2. This means that where the accruing interest (to date of statement) is less than £2 it will not feature on a taxpayer statement. Similarly a charge will not be raised where the total interest payable would be under £2. This may mean that a statement does not show accruing interest (because it is under £2) but that a charge (of £2 or more) may be raised on payment of the tax.
If interest below £2 is paid, for example in proceedings cases, use function CREATE SUNDRY CHARGE to create a charge to allocate the payment.
The statutory due date (SAM60080) is normally the relevant date unless clerically amended using function AMEND RELEVANT DATES.
A claim to reduce the payments on account does not affect the relevant date.
Interest will continue to accrue throughout recovery proceedings.
Note: If a charge of £1000 or less is paid in full within 5 days of the relevant date, interest will not be raised. This feature is NOT to be made known to taxpayers. It is designed only as way of reducing the work the computer has to do so that other processes may be more efficient.
However there is no such period of grace and interest will be charged in the normal way on the full amount due if
- Any amount is outstanding beyond that 5 day period
- The original charge exceeds £1000 but a balance of £1000 or less remains outstanding beyond the relevant date
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