If the enquiry is to be settled by a contract settlement the
interest should be calculated the liability included in the
calculation of the expected offer.
Any such interest should be calculated up to the anticipated
date of payment in the settlement offer.
In other cases the interest due will be added automatically
by the computer. The interest may have to be recorded as part of
the yield from the enquiry.
It should be emphasised to the purchaser that interest is not
a penalty. Interest is charged on tax paid late in order to
Interest is charged at a rate based on a broad average of the
net cost of borrowing and provides normal commercial restitution
for the delay – just as repayment supplement or interest is
intended to compensate the purchaser.
Interest should be calculated as though the correct
liabilities had been assessed and had become final.
Unless all the tax has been paid on account, see
SDLTM85960, the likely date of payment
will have to be estimated and the interest calculated up to that
date.
Any material delay in settlement will normally necessitate
revision of the interest figure. Advising the purchaser of the
daily or weekly figure for the accruing interest when the
computation is issued may be advisable in some cases.
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
