The ACCA (Association of Chartered Certified Accountants) has issued a statement in response to the fact that people owing tax have seen a rise in the interest they pay, while those owed a refund will see no change.
This comes after HM Revenue & Customs (HMRC) raised the rate it charges people and businesses for late tax payments by 0.25 percentage points to 3.25 per cent. However, the repayment interest rate has remained at 0.5 per cent, and has been since 2009.
Calling the situation “simply unfair”, Chas Roy-Chowdury, Head of Taxation at ACCA, says there needs to be a level playing field. However, HMRC has responded saying the repayment rate never goes below 0.5 per cent.
“The rate we pay on repayments never falls below 0.5 per cent, even when the Bank of England base rate is low,” a spokesperson for HMRC says.
“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.”
There are approximately 10 million people in the self-assessment system for income tax. The deadline for online filing is 31 January. Those submitting forms on paper must do so by 31 October.
It is important to be aware that filing your tax return late, or failing to pay the tax you owe on time, could mean you face extra penalty fees and interest charges. It is recommended that you authorise a tax specialist such as Beavis Morgan to handle your tax affairs and deal with HMRC on your behalf. This will ensure that all deadlines are met and that you are not paying more tax than you need to.
For further information and to discuss your tax affairs in further detail, please contact your usual Beavis Morgan Partner.
Note: Please be aware that, from 13 January, HMRC no longer accepts credit card payments as new rules mean they can no longer pass on the fee their bank charges for processing a personal credit card payment. There are however other ways to pay – visit the HMRC website for further information.