HMRC has announced the reduction of the interest imposed on late tax payments, following the recent decision of the Bank of England to reduce the basic price from 4.75 % to 4.5 %.
As of February 17, taxpayers who have debts will witness a low interest rate on late payments from 7.25 % to 7 %. This will provide some of the 1.1 million -year -old taxpayers who have been absent from the January 31 line to provide their returns.
However, the contrast between HMRC fees on late payments and pays the recovered amounts is still important. While the later motivations will now benefit by 7 %, HMRC will only pay by 3.5 % on tax recovered amounts, calculated as the basic rate minus 1 %.
A HMRC spokesman defended the policy, saying: “The difference between rates is in line with the policy of other tax authorities around the world. It positively compares to the commercial practice of the benefits that are imposed on loans or open clouds and the benefits paid on deposits.”
SEB Maley, CEO of the QDOs Insurance Company, acknowledged that although price reduction provides some comfort, the biggest issue is the defect in interest rates in HMRC:
“The good news on the one hand – that those who were unable to pay their tax bill in the past time will pay a lower interest on the amount they owe in taxes. With the presence of 1.1 million, it was said that he was absent from the last deadline, may provide them with the revised interest rate bank England is some comfort.
“But it is a small decrease, in fact. The story here is that HMRC still receives twice the amount of interest, which drives it on the money due for taxpayers in the form of recovered amounts and disciplines. It is a major correspondence and carries taxpayers.”
Mali also warned that those who suffer from late tax bills risk the accurate scrutiny of HMRC, as the tax bill is longer and does not remain paid, and the higher the possibility of the investigation.
As HMRC continues to impose strict penalties on late taxpayers, critics argue that the government must address the defect in how it is dealt with with late payments against the recovered amounts. Currently, taxpayers who motivated self-evaluation who have missed the deadline will witness a slight decrease in the fees-but they are still paying much more benefit than they will get if the roles are reversed.