FINANCE BILL 2001
NEW CLAUSE 18: INTEREST ON UNPAID TAX, ETC: FOOT-AND-MOUTH DISEASE
SUMMARY
1. This clause provides for the charge to interest to be removed where the Inland Revenue have agreed, because of the effect of the foot-and-mouth disease outbreak, to defer payment of tax.
DETAILS OF THE CLAUSE
1. Subsection (1) provides that the section applies where the Inland Revenue has agreed, in exercise of its care and management power, to defer payment of tax because of the effect of the foot-and-mouth disease outbreak.
2. Subsection (2) specifies that where the section applies no interest will be charged on tax deferred from 31 January 2001, or any later date from which the agreement to defer has effect, to the date the agreement ceases.
3. Subsection (3) explains that an agreement to defer ceases to have effect at the end of the period of deferment as in the agreement, but that the agreement is not treated as ceasing to the extent that the Revenue agree to extend the period of deferment in the circumstances of the foot-and-mouth disease outbreak.
4. Subsection (4) specifies that where the agreement provides for payment by instalments the period of deferment for each instalment ends on the date the instalment is to be paid, and that, if the instalment is not paid by the agreed date and there is no agreed extension to the period of deferment, the whole agreement to defer ceases to have effect on that date.
5. Subsection (5) provides for the section to cease to have effect on a date to be specified by Treasury Order, subject to the provision continuing for agreements to defer made before that date.
6. Subsection (6) specifies that the provision applies whether the agreement was made before or after the Finance Act is passed, and whether the agreement was made before or after the due date for payment of the tax.
7. Subsection (7) provides that the section applies if the Revenue are satisfied that although there was no agreement to defer, such an agreement could have been made. In such cases the terms of the agreement are those that the Revenue are satisfied would have been agreed in the circumstances.
BACKGROUND NOTE
1. Current 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. As part of its statutory duty for the ?care and management? of the taxes for which it is responsible under Section 1(1) of the Taxes Management Act 1970, the Inland Revenue can defer payment of tax, and both tax and interest can also ultimately be written off or remitted in certain circumstances. This New Clause is designed to remove any doubts about whether the Revenue's care and management powers enable it to waive interest charges in all the circumstances of the foot-and-mouth disease outbreak.