home | news | site index

CLAUSE 27:  RECOVERY AND INTEREST

SUMMARY

This clause gives effect to Schedule 5 to the Act, which makes provision for the recovery of amounts of aggregates levy due from any person and for the interest payable on such amounts.

SCHEDULE 5

AGGREGATES LEVY: RECOVERY AND INTEREST

Paragraph 1.  Recovery of levy as debt due

This paragraph provides for aggregates levy to be recoverable as a debt due to the Crown.

Paragraph 2.  Assessments of amount of levy due

Paragraph 3.   Supplementary assessments

These paragraphs empower the Commissioners in the circumstances as specified to assess amounts of levy due and to make supplementary assessments where appropriate.  For example, the Commissioners may assess an amount of levy as being due where a taxpayer (or his representative) has failed to render a return or has rendered an incomplete or inaccurate return for a particular accounting period. Such assessments must in all cases be notified to the appropriate person.

In addition, where a taxpayer fails to render a return for any period but pays the levy assessed by the Commissioners for that period, the Commissioners are empowered where they think it appropriate,  in the light of the absence of the earlier return, to make a greater assessment in a later period where a return has again not been rendered than they otherwise would.  

Amounts assessed and notified are recoverable as an amount of aggregates levy due except to the extent that the assessment is withdrawn or reduced.

Paragraph 4.  Time limits for assessments

This paragraph sets out the time limits within which the Commissioners must issue assessments under paragraphs 2 and 3.  The basic limit is two years after the end of the relevant accounting period but this can be extended to three years where the assessment is made within a year of the Commissioners becoming aware of evidence of facts sufficient to assess.    However, in cases of fraud and other similar cases such as failure to notify registrability or evasion, the limit is extended to twenty years.

Certain time limits are also laid down for assessments issued after the taxpayer’s death.

Paragraph 5.  Penalty interest on unpaid levy

This paragraph provides for interest to be charged at the penalty rate on any amount of levy shown on a return that is unpaid. The period of charge runs from the day after the day on which the levy for the relevant accounting period is due to the day before the day  on which the amount shown in the return is paid. 

Paragraph 6.  Interest on overdue levy paid before assessment

This paragraph provides for  interest to be charged at the ordinary rate on amounts of levy paid late but not yet assessed.  The period of charge runs from the day after the day on which the levy for the relevant accounting period is due to the day before the day on which the levy due is paid.

Paragraph 7.  Penalty interest on levy where no return is made

This paragraph provides for interest to be charged at the penalty rate on any amount of levy assessed in the absence of a return .  The period of charge runs from the day after the day on which the levy for the relevant accounting period would have been due (if the relevant return had been duly rendered)  to  the day before the day on which the assessed amount is paid.

Paragraph 8.  Ordinary and penalty interest on under-declared levy

This paragraph provides for interest to be charged on the amount of levy contained in any assessment issued after a return has been received  to recover additional levy due for that period.  The period of charge runs from the day after the day on which the levy for the relevant accounting period is due to the day before the day when the additional amount is paid.

Such interest is charged at two different rates. The part of the period which runs from the due date of the relevant return to the day before the day on which the assessment is notified shall carry ordinary interest, the remainder carries penalty interest. 

The notification of an assessment made under paragraphs 2 and 3 above may specify a date for payment.  In those circumstances, if the assessed amount is paid on or before that date, then it shall only be subject to interest at the ordinary rate under this paragraph for the period up to notification.

Paragraph 9.  Penalty interest on unpaid ordinary interest

This paragraph makes provision for charging penalty interest on amounts of unpaid ordinary interest for the period beginning on the day when the assessment is notified and ending the day before the day on which the assessment is paid.  However, when the Commissioners make an assessment of ordinary interest, they may specify a date for payment.  If the assessed interest is paid on or before that date, the additional charge to  penalty interest shall not apply.

Paragraph 10.  Penalty Interest

This paragraph provides that penalty interest is compound interest calculated at the penalty rate and calculated on a daily basis but added to the principal once a month. The penalty rate is the ordinary interest rate under section 197 of the Finance Act 1996 plus 10 percentage points.

The Commissioners (or an appeal tribunal) may reduce the amount of penalty interest charged to any amount including nil.  Furthermore where a person satisfies the Commissioners (or an appeal tribunal) that there is a reasonable excuse for conduct giving rise to the liability to pay penalty interest, this reasonable excuse may be taken into account in determining any reduction.  In determining whether there is a reasonable excuse, certain matters such as insufficiency of funds, actual loss and good faith are irrelevant.

Paragraph 11.  Supplemental provisions about interest

This paragraph makes supplemental provisions about interest and provides that interest under paragraphs 5 to 9 above shall be paid without any deduction of income tax.

In addition, where interest has been charged on an amount of levy which turns out not to be due, the relevant interest charge is to be removed and such adjustments made as may be necessary.

This paragraph provides for the mechanics of making an assessment of interest under paragraphs 5 to 9.  Some of the details are as follows.

Where a person is liable to interest under 5 to 9, the Commissioners may assess the amount due by way of interest and notify it to him.  They may also make and notify a supplementary assessment where appropriate.  Where an amount has been assessed and notified under this paragraph, then it is recoverable as if it were levy due, but this provision does not apply so as to require  interest to be payable on interest except under  paragraph  9 above(penalty interest on unpaid ordinary interest) or in so far as it falls to be compounded in accordance with paragraph 10 (penalty interest) and shall not have effect if or to the extent that the assessment in question has been withdrawn or reduced.

Similar time limits apply as for assessments of levy due.  Assessments of levy and assessments of interest for the same accounting periods may be combined and notified as one assessment but this assessment must clearly identify the interest element. The paragraph sets out the relevant accounting periods for the interest in different cases which relate to the accounting periods for the underlying levy and further provides that, in certain specified circumstances, the Commissioners can determine the period or periods to the best of their judgement.

Paragraph 13.  Further assessments to penalty interest

Notice of assessment to penalty interest must contain a date to which the amount of interest is calculated. If interest continues to accrue, further assessments may be made.  Where the Commissioners provide a date for payment on an assessment to penalty interest and the interest is paid within that time,  no further interest shall accrue beyond the specified date.

Paragraph 14.  Recovery by distress

This paragraph makes an amendment to the Finance Act 1997 in order to include aggregates levy in the definition of relevant taxes for the purposes of the power to make provision by regulations for enforcement by distress.

Paragraph 15.  Walking possession agreements

This paragraph applies where a distress is authorised to be levied on a person’s goods for non-payment of levy, in accordance with regulations, and both the person levying distress and the person in default have entered into a walking possession agreement.  For the purposes of this paragraph a walking possession agreement allows the goods to remain with the person in default subject to certain conditions, for example that the person in default cannot remove the items without the consent of the Commissioners.

Where a person is in breach of this agreement, he is liable to a penalty of one half of the relevant levy or related amount.  He is not liable to the penalty if he satisfies the Commissioner (or an appeal tribunal) that there is reasonable excuse for the breach.

This paragraph does not apply to Scotland.

Paragraph 16.  Recovery by diligence 

This paragraph makes an amendment to the Finance Act 1997 in order to include aggregates levy in the definition of relevant taxes for the purposes of the power to make provision by regulations for enforcement by diligence.

Paragraph 17.  Preferential debts in England and Wales and Northern Ireland

This paragraph makes an amendment to the Insolvency Act 1986 and the Insolvency (Northern Ireland) Order 1989 in order to make aggregates levy a preferential debt.

Paragraph 18.  Preferred debts in Scotland

This paragraph makes an amendment to the Bankruptcy (Scotland) Act 1985 to make aggregates levy a preferential debt.  

Paragraph 19.  Interpretation of Schedule etc.

Penalty interest is to be construed in accordance with paragraph 10.  Notification of assessments under this Schedule to a person’s representative are to be treated as notification to the person in relation to whom the representative acts.  “Representative” in relation to any person includes that person’s personal representatives, trustee in bankruptcy, liquidator, receiver or tax or other representative.