The ACCA accountancy body has said that the recent interest change is “simply unfair” because of the growing divide between interest rate for repayments to taxpayer and late payment fees.
Simply put the interest charged for those that pay their tax late has increased by 0.25% to 3.25%, supposedly inline with the rise in the Bank rate, whereas the repayment interest has remained at 0.5% and is frozen at this rate, this has been true since 2009.
ACCA have said that they believe there should be a level playing field but HMRC have replied saying the repayment rate has never fallen below its current rate of 0.5% despite the Bank rate.
The reasoning behind this is that HMRC is attempting to prevent overpayment of tax as a way of recieving a higher interest rate than possible on some savings accounts. Therefore based on the current formula used to determine this amount the Bank rate would have to rise higher than 1.5% for this to change.
This is currently a controversial decision as Chas Roy-Chowdhury, head of taxation at ACCA, has said there should be a ‘level playing field’ and that HMRC changes should simliarly apply to both how much they charge and to how much they pay.