Taxman denies profiting from tax refund delays
HM Revenue & Customs denies holding on to money due to low interest rate
The taxman has denied that is profiting by holding back on tax refunds.
With HM Revenue & Customs charging 0.5% interest on tax it is due to repay but 3% on bills that are due, the Telegraph suggested that the taxman had a “vested interest” in delaying payment.
Advisers said that the taxman was taking longer to pay out refunds, with some being delayed by as much as ten weeks while random security checks were undertaken – described as excessive by Smith & Williamson head of tax Richard Mannion.
An HMRC spokesman told the newspaper that most refunds were paid “very promptly” and that its rate on overpaid tax reflected a return on deposits while the rate on unpaid tax was designed to encourage payment at the right time.
“If the interest rate on overpaid tax was too high, it might encourage banking with HMRC,” said the spokesman.