The measure

A consultation document has been released containing draft legislation to include corporation tax and petroleum revenue tax within the harmonised interest regime. Key features of the harmonised interest regime are:

• That a single rate of simple interest will be paid by HMRC on overpayments across all taxes, duties and penalties, other than Quarterly Instalment Payments (QIPs) for corporation tax.
• That a single rate of simple interest will be charged by HMRC across all taxes, duties, and penalties that are paid late to HMRC, other than QIPs for corporation tax.

The consultation document confirms that the QIP regime is to remain unchanged, and will not be brought within the harmonised interest regime, reflecting the fact that the tax payments fall due before there is a known liability.

Who will be affected?

All corporation tax and petroleum revenue tax payers.

When?

It is proposed that that the draft legislation will be included in the 2010 Finance Bill. Due to the need to update HMRC's computer systems, the changes will be implemented in phases over several years and will be brought into effect by Treasury Orders.