TaxPersonal Tax4 FEBRUARY 2000 NEW RATES OF INTEREST PAID BY AND TO CUSTOMS & EXCISE

4 FEBRUARY 2000 NEW RATES OF INTEREST PAID BY AND TO CUSTOMS & EXCISE

As a result of recent changes in base lending rates, the rates of interest paid by and to Customs will increase from 6th February 2000.

As a result of recent changes in base lending rates, the rates of interest paid by and to Customs will increase from 6th February 2000. An Order of the Commissioners of Customs and Excise was issued on 20 January 2000 stating that: – the rate of default interest charged on underdeclared VAT, Air Passenger Duty (APD), Insurance Premium Tax (IPT) and Landfill Tax will increase from 7.5 per cent to 8.5 per cent per annum; – the rate of statutory interest paid by Customs in cases of official error will increase from 4 per cent to 5 per cent per annum; NOTES TO EDITORS Section 197 of the Finance Act 1996 provides that the prescribed rate, and day from which it takes effect, for the purpose of charging interest on indirect taxes shall be set by an order of the Commissioners of Customs and Excise. Statutory Instrument (SI) 1998 No. 1461 was made and laid before the House of Commons on 15th June 1998 and came into force on 6th July 1998. This Statutory Instrument sets out the procedure for setting, and formulae for calculating, Departmental interest rates based on a monthly reference rate. The reference rate will be the percentage per annum found by averaging the base lending rates at close of business on the 12th working day before the sixth day of each month (the “reference day”) of:- Bank of Scotland, Barclays Bank, Lloyds Bank, Midland Bank, National Westminster Bank and The Royal Bank of Scotland. Interest for VAT underdeclared on returns was introduced on April 1990, and is covered by Section 74 of the VAT Act 1994. Interest for IPT undeclared on returns is covered by Schedule 7 paragraph 21 of the Finance Act 1994. Interest for APD undeclared on returns is covered by Schedule 6 paragraph 7 of the Finance Act 1994. Interest for Landfill Tax undeclared on returns is covered by Schedule 5 paragraph 26 of the Finance Act 1996. Statutory interest payments in respect of VAT is covered by Section 78 of the VAT Act 1994. Statutory interest payments in respect of IPT is covered by Schedule 7 paragraph 22 of the Finance Act 1994. Statutory interest payments in respect of APD is covered by Schedule 6 paragraph 9 of the Finance Act 1994. Statutory interest payments in respect of Landfill Tax is covered by Schedule 5 paragraph 29 of the Finance Act 1996. BUSINESSES SHOULD CONTACT THEIR LOCAL VAT ADVICE CENTRE LISTED UNDER HM CUSTOMS AND EXCISE IN THE TELEPHONE DIRECTORY. This news release and other information about HM Customs and Excise can be found at our website: www.hmce.gov.uk

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