Budget Notes

BN94 WAIVING INTEREST AND SURCHARGES FOR THOSE AFFECTED BY NATIONAL DISASTERS

Who is likely to be affected?

1. Taxpayers with tax payable who are adversely affected by events designated as national disasters. The first beneficiaries of this measure will be taxpayers who were unable to pay their taxes on time as a consequence of the severe floods that affected the UK in June and July of 2007.

General description of the measure

2. Legislation will be introduced in Finance Bill 2008 to provide for a power allowing interest and surcharges payable to HM Revenue & Customs (HMRC) to be waived by secondary legislation in the context of events designated as national disasters. HMRC will use this power to meet the commitment the Government made on 25 July 2007 to waive interest and surcharges on tax paid late due to the severe floods that affected the UK in June and July of 2007.

Operative date

3. The measure will have effect from the date that Finance Bill 2008 receives Royal Assent. The power will first be used, with retrospective effect, to waive interest and surcharges on tax paid late as a result of the severe flooding that affected the UK in June and July of 2007.

Current law and proposed revisions

4. Legislation, for example in Part IX of the Taxes Management Act 1970, requires interest to be charged on all unpaid tax from the date it becomes due until the date of payment.

5. This measure will introduce a power that would allow the Commissioners of HM Revenue & Customs to waive interest and surcharges where tax and / or duties are paid late because of a disaster of national significance.

6. Section 107 of the Finance Act 2001 ensured that those affected by foot and mouth should have the interest charge removed where the then Inland Revenue agreed, because of the effect of the foot-and-mouth disease outbreak, to defer the payment of tax. The proposed legislation is modelled on that provision.

7. The Government announcement made on the 25 June 2007 can be found at www.gnn.gov.uk

Further advice

8. If you have any questions about this change, please contact Robert Horwill on 0207 147 2447 (email: robert.horwill@hmrc.gsi.co.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk