The government should review the repayment interest rates as they are ‘unfair’, CIOT said, as there is a huge discrepancy between the rate paid by taxpayers for late payments which is up to 13 times higher than what is returned to those who have overpaid.

HMRC charges interest on late payment at the Bank of England’s base rate, currently 4%, plus 2.5%. However, interest on repayment from HMRC to individuals and businesses is the base rate minus 1%. This means there is usually a difference of 3.5 percentage points between the interest charged on late payments by HMRC and that paid by HMRC on repayments.

In an extreme scenario, this could result in an individual who submits their self-assessment tax return for the year 2020-21 on 31 January 2022, claiming a repayment of £5,000, being returned £57 in interest if HMRC do not make the repayment until 28 February 2023.