This measure clarifies the detail of how interest is applied to late payments for corporation tax, diverted profit tax, inheritance tax, stamp duty and stamp duty land tax (SDLT), as well as extending the scope of the rules to cover the penalties imposed for failure to comply with obligations under PAYE.

It also clarifies and confirms the basis for interest calculations in respect of diverted profits tax and repayment interest by HMRC to ensure that the 2009 interest provisions apply in relation to penalties charged under the Promoters of Tax Avoidance Schemes (POTAS) legislation.

The measure was announced initially on 19 July 2018 and was extended in Budget 2018 to include PAYE penalties. No consultation was conducted.

The rule changes will come into effect from Royal Assent of Finance Bill 2018-19 and this measure will have retrospective and prospective effect from the date the relevant interest was first applied.

The legislation will have immediate retrospective and prospective effect with retrospection dating back to 18 August 1989 in respect of s178 Finance Act 1989 and 6 May 2014 for s101 Finance Act 2009.

Amendment to interest provisions for late payment, repayment and penalties, see OOTLAR, page 186