The interest rate on late payment of tax is due to increase by a further 1.5% in April to 9%, with no equivalent increase in interest on overpaid tax.

The CIOT is urging the government to re-introduce rules which enable HMRC to waive interest on underpaid VAT when no actual tax loss to the Exchequer occurs.

This power was removed from the new VAT interest regime which came into effect for VAT return periods starting on or after 1 January 2023. The exposure to interest where there is no tax loss occurs due to the way the VAT regime operates.