HMRC interest rate change ‘simply unfair’

Written by Adam Cadle
24/08/2018

Accountancy body, ACCA, has said it is “simply unfair” that people owing tax have seen a rise in the interest they pay, while those owned a refund will see no change.

The interest charged to anyone paying their tax late has increased in line with the rise in the Bank rate, but the HMRC repayment rate has been frozen, the BBC said.

ACCA said there should be a level playing field, but HMRC said the repayment rate never went below 0.5 per cent.

The interest rate charged to people who pay their tax late has risen by 0.25 percentage points to 3.25%.

However, the amount paid by HMRC on top of the amount it refunds to those who have overpaid tax is 0.5%, and has been since 2009.

"The rate we pay on repayments never falls below 0.5%, even when the Bank of England base rate is low," a spokesman for HMRC said.

"The different interest rates provide fairness to taxpayers who pay on time. Most people pay their tax on time and it is only right that those who don't, pay a higher rate of interest on the unpaid tax that would otherwise have gone to our schools, hospitals and other vital public services."

However, ACCA head of taxation Chas Roy-Chowdury stated that there should be a level playing field, so HMRC should have made the same change to the rate it charges and the rate it pays.

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