Interest on tax paid late
If your business struggled during the pandemic, you may have tax still outstanding from 2019/20 due to having little or no income from your trade in 2020/21.
All outstanding tax now carries interest at 2.75%. Where the tax has been outstanding for more than six months a surcharge may also apply.
Where you are due a tax repayment for 2020/21, perhaps because you made a loss, you may be assuming that the repayment will be set off against the tax due and therefore stop any further interest running.
Unfortunately, this is not how the tax rules work. The tax repayment for 2020/21 is generally set off against the outstanding tax, but only with effect from the final deadline for submitting the tax return: 31 January 2022 for the 2020/21 tax return.
If your tax return was submitted earlier, we can ask that HMRC treat the effective date of the repayment set-off as the date when your tax return was logged as received by HMRC.
| Action Point! |
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| Speak to us if you still have tax outstanding from 2019/20 in order to minimise any interest payments. |