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The Finance Act 2009, Sections 101 and 102 (Interest on Late Payments and Repayments) (Consequential Amendments) Order 2014

S.I. 2014/1283 · Made 16 May 2014

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Income Tax

Social Security

Made 16th May 2014

Laid before the House of Commons 19th May 2014

Coming into force 20th May 2014

The Treasury make the following Order in exercise of the powers conferred by section 104(5), (6) and (7) of the Finance Act 2009f1:

Annotations to the whole text

Footnotes

f1

2009 c. 10.

Contents

  1. 1Citation, commencement and effect
  2. 2Consequential amendments
  3. Signature
  4. Schedule
  5. 1Social Security Contributions and Benefits Act 1992
  6. 2Social Security Administration Act 1992
  7. 3Social Security Contributions and Benefits (Northern Ireland) Act 1992
  8. 4Social Security Administration (Northern Ireland) Act 1992
  9. 5Income Tax (Trading and Other Income) Act 2005
  10. 6Corporation Tax Act 2009
  11. Explanatory note

1Citation, commencement and effect

(1)

This Order may be cited as the Finance Act 2009, Sections 101 and 102 (Interest on Late Payments and Repayments) (Consequential Amendments) Order 2014 and comes into force on 20th May 2014.

(2)

This Order has effect in relation to payments in respect of Class 1 national insurance contributionsf1 and construction industry scheme payments made on or after 20th May 2014 which are made for the tax year 2014-15 or for a subsequent tax year.

(3)

In paragraph (2) “construction industry scheme payments” means any amount deducted by a contractor from a contract payment under section 61 of the Finance Act 2004 (deductions on account of tax from contract payments)f2.

2Consequential amendments

The Schedule to this Order contains amendments in connection with sections 101 and 102 of the Finance Act 2009.

Signature

Sam Gyimah

Anne Milton

Two of the Lords Commissioners of Her Majesty’s Treasury

16th May 2014

1Social Security Contributions and Benefits Act 1992

After paragraph 6(4B) of Schedule 1 to the Social Security Contributions and Benefits Act 1992 (power to combine collection of contributions with tax)f1 insert—

“(4C)

Interest payable under section 101 of the Finance Act 2009 (late payment interest on sums due to HMRC) on sums due in respect of Class 1 contributions is not to be taken into account in computing any income, profits or losses for any tax purposes.”.

2Social Security Administration Act 1992

In section 121C of the Social Security Administration Act 1992 (liability of directors etc. for company’s contributions)f1—

(a)

in subsection (5) for “at the prescribed rate” substitute “at the Class 1 rate on the Class 1 element of the specified sum, and otherwise at the prescribed rate,”;

(b)

in subsection (7)(c) after “interest on it” insert “at the Class 1 rate on the Class 1 element of it and otherwise”; and

(c)

in subsection (9)—

(i)

before the definition of “contributions” insert—

  • ““the Class 1 rate”—

    1. (a)

      in subsection (5) means the rate from time to time applicable under section 103(1) of the Finance Act 2009; and

    2. (b)

      in subsection (7)(c) means the rate from time to time applicable under section 103(2) of that Act;

  • “the Class 1 element”, in relation to any amount, means so much of that amount as is calculated by—

    1. (a)

      multiplying that amount by so much of the specified amount as consists of Class 1 contributions; and

    2. (b)

      dividing the product of that multiplication by the specified amount;”; and

(ii)

in the definition of “contributions” after “in respect of contributions” insert “(and accordingly, in the definition of “the Class 1 element” given by this subsection, “Class 1 contributions” includes any interest or penalty in respect of Class 1 contributions)”.

3Social Security Contributions and Benefits (Northern Ireland) Act 1992

In paragraph 6 of Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (power to combine collection of contributions with tax) after sub-paragraph (4B)f1 insert—

“(4C)

Interest payable under section 101 of the Finance Act 2009 (late payment interest on sums due to HMRC) on sums due in respect of Class 1 contributions is not to be taken into account in computing any income, profits or losses for any tax purposes.”.

4Social Security Administration (Northern Ireland) Act 1992

In section 115B of the Social Security Administration (Northern Ireland) Act 1992 (liability of directors, etc. for company’s contributions)f1—

(a)

in subsection (5) for “at the prescribed rate” substitute “at the Class 1 rate on the Class 1 element of the specified sums, and otherwise at the prescribed rate,”;

(b)

in subsection (7)(c) after “interest on it” insert “at the Class 1 rate on the Class 1 element of it and otherwise”; and

(c)

in subsection (9)—

(i)

before the definition of “contributions” insert—

  • ““the Class 1 rate”—

    1. (a)

      in subsection (5) means the rate from time to time applicable under section 103(1) of the Finance Act 2009; and

    2. (b)

      in subsection (7)(c) means the rate from time to time applicable under section 103(2) of that Act;

  • “the Class 1 element”, in relation to any amount, means so much of that amount as is calculated by—

    1. (a)

      multiplying that amount by so much of the specified amount as consists of Class 1 contributions; and

    2. (b)

      dividing the product of that multiplication by the specified amount;”; and

(ii)

in the definition of “contributions” after “in respect of contributions” insert “(and accordingly, in the definition of “the Class 1 element” given by this subsection, “Class 1 contributions” includes any interest or penalty in respect of Class 1 contributions)”.

5Income Tax (Trading and Other Income) Act 2005

In section 54(2) of ITTOIA 2005 (penalties and interest that are not deductible for the purposes of computing profits of a trade)f1, for the entry relating to regulations made under section 71 of FA 2004, substitute—

“Interest under section 101 of FA 2009f2 in connection with sums required to be deducted under section 61 of FA 2004 (construction industry)”

6Corporation Tax Act 2009

In section 1303(2) of CTA 2009 (penalties and interest that are not deductible for the purposes of calculating profits)f1, for the entry relating to regulations made under section 71 of FA 2004, substitute—

“Interest under section 101 of FA 2009f2 in connection with sums required to be deducted under section 61 of FA 2004 (construction industry)”

Explanatory note

(This note is not part of the Order)

This Order comes into force on 20th May 2014 and has effect in relation to payments in respect of Class 1 national insurance contributions and payments deducted under section 61 of the Finance Act (“FA”) 2004 (c. 12) (“CIS payments”) made on or after 20th May 2014 which are for the tax year 2014-15 or for a later tax year.

In relation to payments of income tax deducted at source, Class 1 national insurance contributions and CIS payments, the Treasury appointed 6th May 2014 as the date on which sections 101 and 102 of FA 2009 (c. 10) come into force (see S.I. 2014/992). As a consequence any such payment which is not paid to the Commissioners for Her Majesty’s Revenue and Customs (“HMRC”) by the due date (which is set out in the relevant legislation) is liable to late payment interest under the single interest regime in section 101 of FA 2009. Any amount which is overpaid will attract repayment interest under the single repayment interest regime in section 102 of FA 2009 when repaid by HMRC.

Article 2 and the Schedule provide for consequential amendments to primary legislation. As a consequence of the amendments made by paragraphs 1, 3, 5 and 6 of the Schedule where an employer or a contractor fails to make a payment to HMRC of Class 1 national insurance contributions or of a CIS payment, by the due date, the employer or contractor will not be entitled to take any interest paid on those sums into account when computing income, profits or losses for tax purposes. The amendment made by paragraph 2 amends the Social Security Administration Act 1992 (“SSAA”) (c. 5) and the amendment made by paragraph 4 amends the Social Security Administration (Northern Ireland) Act 1992 (“the Northern Ireland Act”) (c. 8) to reflect that where the specified amount for which an officer of a company is made personally liable (under section 121C of SSAA or section 115B of the Northern Ireland Act) is in respect of Class 1 contributions, interest is charged at the rate applicable under section 101 or 102 of FA 2009.

A Tax Information and Impact Note has not been prepared for this Instrument as it gives effect to previously announced policy.